Consider the overlapping generations model and assume that each person has a y₁ endowment of goods when young and y2 endowment of goods when old. T₁ and T₂ are the initial taxes on the young and old respectively. Taxes on young increase by t* and taxes on the old decrease by 3t*r. Using the lifetime budget set, show how this change in taxes changes the individual wealth

Consider the overlapping generations model and assume that each person has a y₁ endowment of goods when young and y2 endowment of goods when old. T₁ and T₂ are the initial taxes on the young and old respectively. Taxes on young increase by t* and taxes on the old decrease by 3t*r. Using the lifetime budget set, show how this change in taxes changes the individual wealth

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter17: Income, Poverty, And Health Care

Section: Chapter Questions

Problem 3P

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