• Corpus ID: 201104367

SPECULATIVE BUBBLES AND TAX POLICY

@inproceedings{Kunieda2019SPECULATIVEBA,
  title={SPECULATIVE BUBBLES AND TAX POLICY},
  author={Shigeki Kunieda and Chuo University and Shigeki Kunieda and Shigeki Kunieda Chuo},
  year={2019}
}
In this paper, I will consider effects of capital gains tax and other tax policy in the model explicitly incorporating bubbles. Rational bubbles may occur when the return from bubbles is taxed more lightly than other assets even in a dynamically inefficient economy. With higher capital gains tax, bubbles should grow faster in order to keep the arbitrage condition with other assets. However investors realize that such higher growth of bubbles is unsustainable. Then, rational bubbles will… 

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