Template-Type: ReDIF-Paper 1.0
Author-Name:  Eurilton Araújo
Author-Name-First: Eurilton
Author-Name-Last: Araújo
Title: Optimal Monetary Policy and Interest Income Taxation
Abstract:  This paper studies optimal discretionary monetary policy when the basic new Keynesian model is extended to incorporate interest income taxation. The elasticities of ináation and the output gap to supply and demand shocks are increasing functions of the tax rate. Moreover, numerical simulations show that high levels of taxation increase ináation volatility, the output gap volatility and the unconditional expectation of the central bankís loss function.
Length:  16 pages
Creation-Date:  2008
Order-URL: https://repositorio.insper.edu.br/handle/11224/5770
File-URL: https://repositorio.insper.edu.br/handle/11224/5770
File-Format: text/html
File-Function: Full text
Number: 037
Handle: RePEc:aap:wpaper:037