A note on the economic interpretation of a proof of existence of general equilibrium with taxes

Abstract

The proof of existence of general equilibrium under taxation given by Shoven and Whalley in 1973 can be reinterpreted as the proof of existence of general equilibrium without taxation. However, an additional good must be introduced into the economy. In this context, this paper shows that it is sufficient to interpret fiscal revenue as the payoff of this artificial resource. Moreover, upon application of the "Sonnenschein-Mantel-Debreu" theorem it can be shown that there is a set of agents that generate the necessary excess demand functions, including those corresponding to the new resource.