Optimal Household Behaviour under Taxation - a Two-Stage Dynamic Programming Approach

This paper presents a method of solving a practical optimization problem which arose in the context of private households' reactions to income tax levied from couples. Since the problem of constrained maximization of the household's life-time utility function in n prospective periods is complicated and sizeable, a two-stage dynamic programming approach is proposed. Splitting the problem into two-sub problems: finding the optimum policy and approximation in the policy space, is based on the dynamic nature of problems of this type, which can be seen as a multi-period decision process. Some provisional results obtained by experimental application appear to be sufficiently promising to justify elaboration.


Issue Date:
1980
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/272266
Language:
English
Total Pages:
23
Series Statement:
REPORT 8020/E




 Record created 2018-04-27, last modified 2020-10-28

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)