| Inflation is an everlasting theme for an economist especially for a macroeconomist. Inflation has permanent impact on our social life. The reason of inflation, the choice between inflation and yields, and how to avert malignant inflation are the main problems of every government.If there is one question that can cause a controversy, it must have something to do with taxation. For example: who really pays the taxation? Should we impose taxation on the poor or on the rich ?It is a great shame to economists that when the conclusions they draw were put into practice, the outcome was not satisfactory. Theoretically, the head tax is the only kind of taxation that does not vitiate effectiveness of the economy. But when Madam Satrian levy on head tax, we can see how much indignity she had irrigated. Ramsey, Mirrlees and Stiglitz made excellent research into this field. The latter two had been granted Nobel Prize in Economics. Under the direction of Keynes, Ramsey made full use of new development in economics and drew a valuable conclusion . The conclusion is: collecting taxation on every kind of commodities, let each commodities' consumption fall at the same proportion. But the premise of the conclusion is: each consumer has the same character., which means the conclusion accounts for the effectiveness but ignores the equality. In the early 1960s, Mirrlees was aware of the problem and took it into account, he improved the Ramsey's model and drew some interesting conclusions.After three years of postgraduate study, I am also aware that the Ramsey's model has shortcomings as following:1.Imposing taxation just on the consumption goods. As we all know, the goods can be divided into two parts, capital goods and consumptiongoods. It will lead to the shrink of consumer goods industries and at last it will cause the ruin of the equation of the economic structure.2.The model is static but dynastic. Ramsey did not take the saving into account, and all of the income was used up in one period. According to the life circle hypothesis, consumer tries hard to make each period consumption goods equal. Consumer spends more in good time and less in bad time. If the government collects taxation only on consumption goods, it will decrease the consumption rate and increase the saving rate.3.Ramsey did not take equality into account, but this problem was settled by Mirrlees .4.Ramsey did not take the money element into account, which is not realistic. After money was brought into the world, the whole world was divided into two parts. One is the all kinds of commodities, the other is the money. It is unreasonable to eliminate the money element.I can't solve the first two problems, but to the third question, I want to throw light on it.In primitive society, sheep, shell and salt were all regarded as money, while sheep , shell and salt were goods in themselves. In modern society, the gold and silver are considered as money because they con be cut off easily and preserved for a long time. In addition, their volume is smaller while they are worth more. Meanwhile, the gold and silver have some practical applications.Introducing the money element into the model, we have to take the effect of real money into account. I have encountered some technical problems, but I try to settle some of them on my own.Imposing taxation only on "money" is the last kind of tax that economists agree with. Mr Friedman and Mr Hayek are the last two persons to agree with it. I think that since the head tax is impractical, the rest kinds of taxes all endanger the effectiveness. If we deal with the problem carefully, it is sound to collect taxation on "money".Galloping inflation is harmful, while malignant inflation is worst of all. But when one country falls into disinflation, the economy takes on the look of low increment and high unemployment. So a certain degree of inflation is reasonable.Since we talked about the inflation ,I have to spend much time on the theories of inflation so as to understand it deep... |
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