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Sequential Equilibria in a Ramsey Tax Model

Staff Report 258 | Published February 1, 1999

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Sequential Equilibria in a Ramsey Tax Model

Abstract

This paper presents a full characterization of the equilibrium value set of a Ramsey tax model. More generally, it develops a dynamic programming method for a class of policy games between the government and a continuum of consumers. By selectively incorporating Euler conditions into a strategic dynamic programming framework, we wed two technologies that are usually considered competing alternatives, resulting in a dramatic simplification of the problem.


Published In: Econometrica (Vol. 69, No. 6, November 2001, pp. 1491-1518) https://doi.org/10.1111/1468-0262.00255

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