The Study on the Problem of Optimal Government Taxation and Debt under the Uncertainty of Inflation
With the development of the economy,the issue of government taxes and debt has also become the focus of attention.Especially during the economic downturn,how to achieve stable economic development through reasonable regulation and control of tax and debt levels has also become the focus of government discussions.Considering that real life will face the impact of inflation,this paper will construct an optimal government tax and debt model in the context of inflation,and try to analyze the impact of inflation on China's optimal tax and debt.Firstly,the stochastic analysis theories are used to derive the dynamic equation of the real government debt value in the inflationary uncertainty environment,and then the Hamilton-Jacobian-Bellman(HJB)equation of the optimal real government value in the inflationary uncertainty environment is derived by using the dynamic programming principle.Finally,the numerical simulation of the optimal tax and debt of the government is carried out to analyze the impact of inflation on the optimal tax and debt of the government,as well as the impact on the time to reach the debt capacity,and predict the time when China will reach the debt capacity.The results suggest that under optimal taxation and debt,higher expected inflation and lower inflation volatility reduce the marginal cost of tax and debt,and shorten the time to reach debt capacity.
inflationoptimal tax and debtfinancial marketprinciples of dynamic programmingdebt capacity
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