Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/18870 
Authors: 
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper No. 1231
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper makes a fresh attempt at characterizing optimal commodity taxes. Under the usual assumptions, an extremely simple expression of second-best commodity taxes is derived, showing tax rates as functions of observable variables only, rather than as functions of unobservable variables such as compensated cross elasticities. The main formula is independent of special preferences, and independent of the number of commodities. It has a simple economic meaning and could be particularly useful for empirical research. Examples and remarks on the normalization problem are provided.
Subjects: 
optimal commodity taxation
Ramsey rule
JEL: 
H21
Document Type: 
Working Paper
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