Ramsey Taxation in the Global Economy

V. V. Chari, Consultant

Juan Pablo Nicolini, Senior Research Economist

Pedro Teles

December 2017 | Federal Reserve Bank of Minneapolis Working Paper 745

We study cooperative optimal Ramsey equilibria in the open economy addressing classic policy questions: Should restrictions be placed to free trade and capital mobility? Should capital income be taxed? Should goods be taxed based on origin or destination? What are desirable border adjustments? How can a Ramsey allocation be implemented with residence-based taxes on assets? We characterize optimal wedges and analyze alternative policy implementations.

DOI: https://doi.org/10.21034/wp.745