Property rights and long-run capital
Dávila J.
December 2021John Wiley and Sons Inc
Journal of Public Economic Theory
2021#23Issue 61261 - 1286 pp.
Proprietary capital falling into the public domain inefficiently decreases capital accumulation. As a consequence, the market steady state consumption underperforms the planners by 4.6%–9.1% in a neoclassical infinitely-lived agents economy with constant returns to scale and standard empirically supported parameters. The results extend robustly to an overlapping generations economy, for which the gap is 10.5% when similarly parametrized. A policy decentralizing, in the latter, the planners steady state instead consists of (i) subsidizing the rental rate of private capital at its depreciation rate, and (ii) taxing households negative net position between, on the one hand, firm and depreciated capital ownership, and on the other, borrowing. Under this policy, the necessary tax rate on households negative net position is smaller the bigger the absolute value of the latter and, hence, the bigger the corresponding monetary real balances held by households.
capital accumulation , growth , property rights , public domain
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Department of Economics, School of Sciences and Humanities, Nazarbayev University, Nur-Sultan, Kazakhstan
Department of Economics
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