Optimal Tax Policy Under Uncertainty Over Tax Revenues

Nathan Seegert, 2019.
The author develops an excessive risk index to quantify the amount of unnecessary risk governments accept when writing tax policy among uncertainty in private and public consumption. The author finds that the cost of inefficient risk for U.S. state governments is roughly 40% of their expected tax revenues and that this cost is mostly due to states being overdependent on a given tax source. [download pdf]