Social discounting and incentive compatible fiscal policy

Catarina Reis*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)


This paper considers a representative agent model of linear capital and labor income taxation in which the government cannot commit ex-ante to a sequence of policies for the future. In this setup, if the government is more impatient than the households, the capital income tax will be positive in steady state. Thus, impatience and lack of commitment are able to generate positive capital taxes in the long run, although each of these characteristics individually was not. Furthermore, the steady state to which the economy converges is independent of initial conditions.
Original languageEnglish
Pages (from-to)2469-2482
Number of pages14
JournalJournal of Economic Theory
Issue number6
Publication statusPublished - Nov 2012


  • Debt
  • Fiscal policy
  • Incidence
  • Optimal taxation


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