ABSTRACT
The 'capital levy problem' studied in this section has a long history in economics. Eichengreen [50] provides a historically oriented account of the capital levy problem. More recently, the credibility problem in capital taxation was formulated in an illustrative two-period model by Fischer [55]. An early treatment of the surprise-inflation problem is Auernheimer [15], but the classic here is definitely Calvo [29]. Calvo [30] deals with repudiation of domestic debt.
