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Article: Studies from A. Kaneko and co-authors have provided new information about economics.
- Article from:
- Economics Week
- Article date:
- November 20, 2009
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"This paper examines the effect of a consumption tax on economic growth using an overlapping generations (OLG) model with money holdings," scientists in Okinawa, Japan report.
"We show that the neutrality of the consumption tax does not hold in the money-in-the-utility-function model, because a change in consumption taxation induces the substitution of money holdings for consumption, and the money is the net wealth within the OLG structure. An increase in the consumption tax rate lowers (raises) the growth rate under a low (high) monetary expansion rate," wrote A. Kaneko and colleagues.
The researchers concluded: "On the other hand, in the ...