Optimality of a Constant Tax on Nontradable Consumption
In Section 12.10, we characterized a time-varying subsidy on nontraded consumption that achieves the unconstrained equilibrium. Show that the unconstrained equilibrium can also be supported by a time-invariant subsidy on nontradable consumption.
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---
title: "Exercise 12.10"
subtitle: "Optimality of a Constant Tax on Nontradable Consumption"
---
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## Problem
In Section 12.10, we characterized a time-varying subsidy on nontraded consumption that achieves the unconstrained equilibrium. Show that the unconstrained equilibrium can also be supported by a time-invariant subsidy on nontradable consumption.
## Answer
_No solution has been posted yet. If you have a solution, we invite you to share it in the comment box at the bottom of this page._