Resumen de A tax-investment dynamic reaction model

M. Victoria Fernández, C. Sánchez

• This paper introduces a two-agent dynamic model for studying optimal behaviour of Government and a representative private firm regarding tax and investment policies. Each agent tries to maximize an objective function over different relevant variables. Government will focus on stating the appropriate tax rate in order to achieve long run budget equilibrium. On the other side firms will try to determine the optimal investment policy according prices for the single good produced and the cost of use of capital equipment. We will derive the conditions for optimal long run equilibrium and the reaction functions for each agent in the model.