The paper studies the dynamic macroeconomic effects of various forms of capital income taxation in a model of a small open economy with perfect mobility of financial capital and intertemporal optimization on the part of households and firms. One of the noteworthy results is that the introduction...

The paper develops a model of endogenous economic growth, where sustainable growth is driven by private capital accumulation and productive government spending on education and pollution abatement. The economy is distorted by pollution externalities in production and consumption; by taxes and...

All modern labor market theories capable of explaining involuntary unemployment as an equilibrium phenomenon imply that increased income tax progressivity reduces unemployment, but they also imply that higher progressivity tends to reduce work effort and labor productivity. This suggests that...

The paper studies the short-run, dynamic, and steady-state effects of tax policy in an open economy, comparing the macroeconomic effects of a consumption tax with the effects of various types of income tax. The analyticl framework is a model of intertemporal optimization over finite expected...

The paper sets up an overlapping model of two economies linked by capital mobility to study the potential welfare gains from international coordination of tax and expenditure policies. The first part of the paper deals with the long run and finds that if the marginal source of public finance is...