| 来源类型 | Discussion paper
|
| 规范类型 | 论文
|
| 来源ID | DP3304
|
| DP3304 Model Misspecification and Under-Diversification |
| Tan Wang
|
| 发表日期 | 2002-04-20
|
| 出版年 | 2002
|
| 语种 | 英语
|
| 摘要 | Economists traditionally tackle normative problems by computing optimal policy, ie the one that maximizes a social welfare function. In practice, however, a succession of marginal changes to a limited number of policy instruments are implemented, until no further improvement is feasible. I call such an outcome a ?restricted local optimum?. I consider the outcome of such a tatonment process for a government that wants to optimally set taxes given a tax code with a fixed number of brackets. I show that there is history dependence, in that several local optima may be reached, and which one is reached depends on initial conditions. History dependence is stronger (ie there are more local optima), the more complex the design of economic policy, ie the greater the number of tax brackets. It is also typically stronger, the greater the interaction of policy instruments with one another ? which in my model is equivalent to agents having a more elastic labour supply behaviour. Finally, for a given economy and a given tax code, I define the latter?s average performance as the average value of the social welfare function across all the local optima. One finds that it eventually sharply falls with the number of brackets, so that the best performing tax code typically involves no more than three brackets. |
| 主题 | International Macroeconomics
; Labour Economics
|
| 关键词 | Complexity
Optimal taxation
Bouded rationality
Learning
Multiple equilibria
Path dependence
|
| URL | https://cepr.org/publications/dp3304
|
| 来源智库 | Centre for Economic Policy Research (United Kingdom)
|
| 资源类型 | 智库出版物
|
| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/532331
|
推荐引用方式
GB/T 7714 |
Tan Wang. DP3304 Model Misspecification and Under-Diversification. 2002.
|
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