Redistribution, taxes, and the median voter

We study a simple model of production, accumulation, and redistribution, where agents are heterogeneous in their initial wealth, and a sequence of redistributive tax rates is voted upon. Though the policy is infinite-dimensional, we prove that a median voter theorem holds if households have identica...

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Veröffentlicht in:Review of economic dynamics 2006-04, Vol.9 (2), p.211-223
Hauptverfasser: Bassetto, Marco, Benhabib, Jess
Format: Artikel
Sprache:eng
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Zusammenfassung:We study a simple model of production, accumulation, and redistribution, where agents are heterogeneous in their initial wealth, and a sequence of redistributive tax rates is voted upon. Though the policy is infinite-dimensional, we prove that a median voter theorem holds if households have identical, Gorman aggregable preferences; furthermore, the tax policy preferred by the median voter has the “bang-bang” property.
ISSN:1094-2025
1096-6099
DOI:10.1016/j.red.2006.02.001