Optimal tax policy under habit formation and capital utilization

Abstract

Our objective is to investigate, how the combination of habit formation with endogenous capital utilization decisions affects the process of economic growth. We find that in the presence of positive productivity growth, habit formation in consumption reduces the rate of capital utilization while increasing the long run stock of capital. We show in the… (More)

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Cite this paper

@inproceedings{Monteiro2015OptimalTP, title={Optimal tax policy under habit formation and capital utilization}, author={Gonçalo Monteiro and Adam J. L. Cook and Sanjoy Dey}, year={2015} }