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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (47721)	12/19/2005 3:42:27 PM
From: gpowell	Respond to of 110194

Huh? We are talking about two periods where in the first there's one configuration of government borrowing with an attendant tax rate and then there's an outcome period. Government borrowing must stay constant if the tax rate isn't changed, so one can't take tax rate as an arbitrary variable. Ah, I see. I thought you were implying that Ricardian Equivalence asserted that shifts in the distribution of taxes over time would have zero economic effect. The variable isn't arbitrary which the pseudo classical assumption and the Neo Keynesian assumption had assumed it was arbitrary. Synergy(the sum of the parts is greater than the whole because the sum is distributed over time where it can achieve new regimes of efficiency) that comes from individuals forming profit seeking groups where more profit can be realized. At no greater than the same tax rate government borrowing can increase because government's tax take is greater. And this synergy comes strictly from the additional allocation choices available to economic agents, i.e. buying bonds and/or risk? And if so, over time, might we expect it to be exponentially related to a reduction in the deadweight loss of the corresponding tax? I agree that a change in the marginal tax rate must surely lead to a change in marginal behavior. Then you must take back, "Only that a shift from taxes to borrowing result in no net change in the distribution of resources". Misstatement on my part, should have said a change in the distribution of taxes...