Title: Income and wealth inequality with progressive income taxation in an integrated Walrasian-general equilibrium and neoclassical growth theory

Authors: Wei-Bin Zhang

Addresses: College of Asia Pacific Management, Ritsumeikan Asia Pacific University, Beppu-Shi, Oita-Ken 874-8577, Japan

Abstract: This study develops a dynamic economic growth model of public goods in a dynamic general equilibrium theory for an open economy with heterogeneous households and progressive income taxation. The tax income is spent on supplying public goods. The economic system consists of one production sector and one public sector. The public sector is financially supported solely by the tax income. The model describes dynamic interactions between economic growth, wealth accumulation, progressive income taxation, and public services in an internationally open environment. The model is developed for any number of types of households. We simulate the model to demonstrate the existence of equilibrium and motion of the dynamic system. We also examine the effects of changes in different parameters on the motion of the economic system.

Keywords: progressive income taxation; wealth accumulation; Walrasian theory; endogenous labour supply; public services; income inequality; wealth inequality; general equilibrium theory; neoclassical growth theory; economic growth; public goods; open economy; dynamic modelling; simulation.

DOI: 10.1504/IJGE.2016.079710

International Journal of Green Economics, 2016 Vol.10 No.1, pp.15 - 31

Received: 03 Dec 2015
Accepted: 31 Dec 2015
Published online: 12 Oct 2016 *

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