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Optimal Taxation and Constrained Inefficiency in an Infinite-Horizon Economy with Incomplete Markets

Gottardi, Piero; Kajii, Atsushi; Nakajima, Tomoyuki - CESifo - 2011

We study the dynamic Ramsey problem of finding optimal public debt and linear taxes on capital and labor income within a tractable infinite horizon model with incomplete markets. With zero public expenditure and debt, it is optimal to tax the risky labor income and subsidize capital, while a...

Persistent link: https://www.econbiz.de/10009293486

Illiquidity and Under-Valuation of Firms

Gale, Douglas; Gottardi, Piero - CESifo - 2009

We study a competitive model in which market incompleteness implies that debt-financed firms may default in some states … of nature and default may lead to the sale of the firms’ assets at fire sale prices when markets are illiquid. This … incompleteness is the only friction in the model and the only cost of default. The anticipation of such losses alone may distort …

Persistent link: https://www.econbiz.de/10008572580

Basel Accord and Financial Intermediation: The Impact of Policy

Berka, Martin; Zimmermann, Christian - CESifo - 2012

tightening of regulation in bad times. This is performed with an heterogeneous agent economy with occupational choice, financial …

Persistent link: https://www.econbiz.de/10009645629

The Tragedy of Annuitization

Heijdra, Ben J.; Mierau, Jochen O.; Reijnders, Laurie S. M. - CESifo - 2010

We construct a tractable discrete-time overlapping generations model of a closed economy and use it to study government redistribution of accidental bequests and private annuities in general equilibrium. Individuals face longevity risk as there is a positive probability of passing away before...

Persistent link: https://www.econbiz.de/10008511614

The Lindahl Equilibrium in Schumpeterian Growth Models: Knowledge Diffusion, Social Value of Innovations and Optimal R&D Incentives

Gray, Elie; Grimaud, André - CESifo - 2014

What is the social value of innovations in Schumpeterian growth models? This issue is tackled by introducing the concept of Lindahl equilibrium in a standard endogenous growth model with vertical innovations which is extended by explicitly considering knowledge diffusion on a Salop (1979)...

Persistent link: https://www.econbiz.de/10010748305

A Market for Connections

Miettinen, Topi; Poutvaara, Panu - CESifo - 2012

Government or company decisions on whom to hire are mostly delegated to politicians, public sector officials or human resources and procurement managers. Due to anti-corruption laws, agents cannot sell contracts or positions that they are delegated to decide upon. Even if bribing is ruled out,...

Persistent link: https://www.econbiz.de/10010548151

Annuity Market Imperfection, Retirement and Economic Growth

Heijdra, Ben J.; Mierau, Jochen O. - CESifo - 2009

We study the effects of an annuity market imperfection on individual agents’ labour supply and retirement decisions and on the macroeconomic growth rate in an overlapping generations model with endogenous growth. We model imperfect annuities by introducing a load factor on the interest rate...

Persistent link: https://www.econbiz.de/10005013054

Economic Growth and Longevity Risk with Adverse Selection

Heijdra, Ben J.; Reijnders, Laurie S. M. - CESifo - 2009

We study a closed economy featuring heterogeneous agents and exhibiting endogenous economic growth due to interfirm external effects. Individual agents differ in terms of their mortality profile. At birth, nature assigns a health status to each agent. Health type is private information and...

Persistent link: https://www.econbiz.de/10008583659

Contagion in Financial Networks: A Threat Index

Demange, Gabrielle - CESifo - 2015

should be injected during a default episode or to evaluate the impact of raising capital before the occurrence of default …

Persistent link: https://www.econbiz.de/10011257674

Credit Market Competition and Liquidity Crises

Carletti, Elena; Leonello, Agnese - CESifo - 2014

shortage sell loans on the interbank market. Two equilibria emerge. In the no default equilibrium, all banks hold enough … reserves and remain solvent. In the mixed equilibrium, some banks default with positive probability. The former exists when …

Persistent link: https://www.econbiz.de/10010743450