Monetary taxation in a monetary exchange economy
Abstract We study monetary taxation in an intertemporal general equilibrium model with price-tax uncertainty. Ad valorem taxation is introduced into a fully monetarized temporary equilibrium system which admits barter and monetary exchange. The tax system is sufficiently flexible to allow for a variety of taxation schemes and policies, both within and between periods. The proof of the existence of a competitive price-tax equilibrium constitutes a departure point for the rigorous study of fiscal policy in a dynamic framework.