Should rational agents take into consideration government policy announcements? A skilled agent (an econometrician) could set up a model to combine the following two pieces of information in order to anticipate the future course of fiscal policy in real-time: (i) the ex-ante path of policy as...

This paper estimates the dynamic effects of changes in taxes in the United States. We distinguish between the effects of changes in personal and corporate income taxes using a new narrative account of federal tax liability changes in these two tax components. We develop an estimator in which...

This paper compares constraints on the public debt with constraints on the primary deficit. The analysis takes into account how an optimizing government reacts to the different constraints when deciding on a spending and borrowing plan. We find that the economy behaves similarly under both...

Using a human-capital-based growth model, we show the essential role of labour mobility and cross-country tax harmonization in equalizing income levels of countries that start off from different initial income positions. Knowledge spillovers cum labour mobility are the driving forces behind the...

Standard economic reasoning based on competitive labour markets suggests that migrant inflow will unambiguously lead to allocative gains for the native population of a host country. Even abstracting from the costs of integration, however, this result is not robust when important labour market...

In this paper we use a simple climate model with endogenous environmental technical change in order to analyse the effects on equity and efficiency of different degrees of restrictions on trade in the market for pollution permits. The model is obtained by incorporating in Nordhaus and Yang...

The Paper builds a simplified model describing the economy of a currency union with decentralized national fiscal policy, where the main features characterizing the policy-making are similar to those in EMU. National governments choose the size of deficit taking into account the two main rules...

When credit markets to finance investment in the human capital of young people are missing, the competitive equilibrium allocation is inefficient. When generations overlap, this failure can be mitigated by properly designed social institutions such as public education and public pensions. We...

Why have state-owned firms been so common? One explanation, proposed in the past, is that if state firms can be induced to maximize pretax profits, then state ownership may be less inefficient than private ownership when corporate tax rates are high. If this argument were right, the capital...

This Paper considers the optimal design of public pension provision for the retired and income support for those of working age. We consider social security systems that differ in terms of the level of benefits, degree of means testing and the nature of contributions. We aim to find which system...