TY - JOUR
T1 - Property rights and long-run capital
AU - Dávila, Julio
N1 - Funding Information:
Previous incomplete versions of this paper have been circulated under the titles “Public Domain” and “On the Effects of Private Capital falling into the Public Domain.” The author thanks the associate editor and an anonymous referee for remarks helping to improve the paper, as well as the feedback from colleagues at seminars and conferences where partial results were presented. Funding from a Social Policy Research grant by Nazarbayev University is gratefully acknowledged.
Publisher Copyright:
© 2021 Wiley Periodicals LLC
PY - 2021
Y1 - 2021
N2 - Proprietary capital falling into the public domain inefficiently decreases capital accumulation. As a consequence, the market steady state consumption underperforms the planner's by 4.6%–9.1% in a neoclassical infinitely-lived agents economy with constant returns to scale and standard empirically supported parameters. The results extend robustly to an overlapping generations economy, for which the gap is 10.5% when similarly parametrized. A policy decentralizing, in the latter, the planner's steady state instead consists of (i) subsidizing the rental rate of private capital at its depreciation rate, and (ii) taxing households' negative net position between, on the one hand, firm and depreciated capital ownership, and on the other, borrowing. Under this policy, the necessary tax rate on households' negative net position is smaller the bigger the absolute value of the latter and, hence, the bigger the corresponding monetary real balances held by households.
AB - Proprietary capital falling into the public domain inefficiently decreases capital accumulation. As a consequence, the market steady state consumption underperforms the planner's by 4.6%–9.1% in a neoclassical infinitely-lived agents economy with constant returns to scale and standard empirically supported parameters. The results extend robustly to an overlapping generations economy, for which the gap is 10.5% when similarly parametrized. A policy decentralizing, in the latter, the planner's steady state instead consists of (i) subsidizing the rental rate of private capital at its depreciation rate, and (ii) taxing households' negative net position between, on the one hand, firm and depreciated capital ownership, and on the other, borrowing. Under this policy, the necessary tax rate on households' negative net position is smaller the bigger the absolute value of the latter and, hence, the bigger the corresponding monetary real balances held by households.
KW - capital accumulation
KW - growth
KW - property rights
KW - public domain
UR - http://www.scopus.com/inward/record.url?scp=85106328247&partnerID=8YFLogxK
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U2 - 10.1111/jpet.12516
DO - 10.1111/jpet.12516
M3 - Article
AN - SCOPUS:85106328247
SN - 1467-9779
VL - 23
SP - 1261
EP - 1286
JO - Journal of Public Economic Theory
JF - Journal of Public Economic Theory
IS - 6
ER -