User Account

All Pages

Explain the properties of tax-smoothing model

Assignment Help Microeconomics
Reference no: EM132171654

Question: If the tax rate follows a random walk (and if the variance of its innovations is bounded from below by a strictly positive number), then with probability 1 it will eventually exceed 100 percent or be negative. Does this observation suggest that the tax-smoothing model with quadratic distortion costs is not useful as either a positive or normative model of fiscal policy, since it has an implication that is both clearly incorrect as a description of the world and clearly undesirable as a prescription for policy? Explain your answer briefly.

Reference no: EM132171654

Questions Cloud

What events would he list on his site : What if, say, Edgar Allan Poe, Elvis Presley, or Guglielmo Marconi had a Facebook account? What would it look like? What events would he list on his site
Determine and manipulate laplace transforms : Determine and manipulate Laplace transforms, analysing the results of the software simulations, comparing these to the derived solutions and adjusting
Explain the fundamental concepts in managerial economics : Briefly explain the fundamental concepts in managerial economics for effective decision making. What are the significance and the relevant features.
Explain the difference between cost-push and demand : Explain the difference between cost-push and demand-pull inflation (use a model to illustrate your answer).
Explain the properties of tax-smoothing model : If the tax rate follows a random walk (and if the variance of its innovations is bounded from below by a strictly positive number).
Why do supply and demand curves move : Why do supply and demand curves move? How is this different from a movement along a curve?
What price do you charge the public : a. What price do you charge the public? b. What would happen to profits if you charged twice as much?
Explain the concept of backward scheduling : Explain the concept of backward scheduling and give examples of how you use backward scheduling in your personal life.
Find the analogous expression for the case : Status-quo bias. (Fernandez and Roderick, 1991.) There are two possible policies, A and B. Each individual is either one unit of utility better off.

Reviews

Write a Review

Microeconomics Questions & Answers

  The free rider problem

Question: Explain why the free rider problem makes it difficult for perfectly competitive markets to provide the Pareto efficient level of a public good.

  Failure of the super committee is good thing for economy

Some commentators have argued that the failure of the “Super committee” is good thing for the economy?  Do you agree?

  Case study analysis about optimum resource allocation

Case study analysis about optimum resource allocation: -  Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's productio..

  Fixed cost and vairiable cost

Questions:  :   Which of the following are likely to be fixed costs and which variable costs for a chocolate factory over the course of a month?  Explain your choice.

  Problem - total cost, average cost, marginal cost

Problem - Total Cost, Average Cost, Marginal Cost: -  Complete the following table of costs for a firm.  (Note: enter the figures in the  MC   column  between  outputs of  0 and 1, 1 and 2, 2 and 3, etc.)

  Oligopoly and demand curve problem

Problem based on Oligopoly and demand curve,  Draw and explain the demand curve facing each firm, and given this demand curve, does this mean that firms in the jeans industry do or do not compete against one another?

  Impact of external costs on resource allocation

Explain the impact of external costs and external benefits on resource allocation;  Why are public goods not produced in sufficient quantities by private markets?  Which of the following are examples of public goods (or services)? Delete the incorrec..

  Shifts in demand and movements along the demand curve

Describe the differences between shifts in demand and movements along the demand curve. What are the main factors which can shift the demand curve? Explain why they cause the demand curve to shift. Use examples and draw graphs to support your discuss..

  Article review question

Article Review Question: Read the following excerpts from the article "Fruit, veg costs surge' by Todd, Dagwell, published in the Herald on January 25th 2011 and answer questions below:

  Long-term growth, international trade & globalization

Long-term Growth, International Trade & Globalization:- This question deals with concepts such as long-term growth, international trade and globalization. Questions related to trade deficit, trade surplus, gains from trade, an international trade sce..

  European monetary union (emu) in crisis

"Does the economic bailout of Spain and Greece spell the beginning of the end for the European Monetary Union (EMU)?"

  Development game “settlers of catan”

Read the rules of the game, the overview and the almanac for the Development Game "Settlers of Catan"

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd