We are thankful to V.V. Chari for helpful comments.
Optimal Taxation: Merging Micro and Macro Approaches
Version of Record online: 20 JUL 2011
© 2011 The Ohio State University
Journal of Money, Credit and Banking
Volume 43, Issue Supplement s1, pages 147–174, August 2011
How to Cite
GOLOSOV, M., TROSHKIN, M. and TSYVINSKI, A. (2011), Optimal Taxation: Merging Micro and Macro Approaches. Journal of Money, Credit and Banking, 43: 147–174. doi: 10.1111/j.1538-4616.2011.00413.x
- Issue online: 20 JUL 2011
- Version of Record online: 20 JUL 2011
- Received September 1, 2010; and accepted in revised form February 8, 2011.
- optimal taxation;
- asymmetric and private information;
- redistributive effects;
- optimal social insurance
This paper argues that the large body of research that follows Mirrlees approach to optimal taxation has been developing in two directions, referred to as the micro and macro literatures. We review the two literatures and argue that both deliver important insights that are often complementary to each other. We argue that merging the micro and macro approaches can prove beneficial to our understanding of the nature of efficient redistribution and social insurance and can deliver implementable policy recommendations.