Showing 1 - 10 of 32
In this paper we investigate the welfare effects of capital income taxation in a standard one commodity general equilibrium model with incomplete markets (GEI) and production. We consider a competitive economy of two periods with uncertainty over a finite number S of possible states of nature...
Persistent link: https://www.econbiz.de/10005043123
Current Office of Management and Budget (OMB) guidelines use the interest rate as a basis for the discount rate, and have nothing to say about an intergenerationally fair discount rate. We derive this discount rate by differentiating a social welfare function with respect to perturbations in...
Persistent link: https://www.econbiz.de/10005043482
For two independent principles of intergenerational equity, the implied discount rate equals the growth rate of real per-capita income, say 2%, thus falling right into the range suggested by the U.S. Offce of Management and Budget. To prove this, we develop a simple tool to evaluate small policy...
Persistent link: https://www.econbiz.de/10005008455
In this paper we investigate the welfare effect of capital income taxation in a standard one commodity general equilibrium model with incomplete markets (GEI) and production. We consider a competitive economy of two periods with uncertainty over a finite number S of possible states of nature...
Persistent link: https://www.econbiz.de/10005634066
This note points out the differences between conducting several projects within one big firm (common ownership) and conducting each project within an independent firm (separate ownership).
Persistent link: https://www.econbiz.de/10005065410
This paper analyzes the implications of executive hedge markets for firm value maximization in an optimal contracting framework. The main results are as follows: Without any hedging ability, the manager underinvests in risk at the firm level to diversify his own compensation risk. If the manager...
Persistent link: https://www.econbiz.de/10005043695
In an exogenous-growth economy with overlapping generations (OG) we analyse local stability of the balanced growth equilibria with respect to perturbations of consumption endowments, thought of as the "monetised" value of a government policy to individuals. We show that perturbed economies have...
Persistent link: https://www.econbiz.de/10008550189
The popular discounted utilitarian criterion for infinite horizon social choice has been criticized on the ground that it treats successive generations unfairly. I propose to evaluate intergenerational welfare with a rank- discounted utilitarian (RDU) criterion instead. The criterion amounts to...
Persistent link: https://www.econbiz.de/10008642219
We reconsider the well-known result of Arrow (1953) that the set of equilibria of an economy with complete markets coincides with the one of an economy with sequentially complete markets. We show by means of two examples that this result is problematic when there exist multiple equilibrium...
Persistent link: https://www.econbiz.de/10005042787
In this paper we present a model of credit market with several homogeneous lenders competing to finance an investment project. Contracts are non-exclusive, hence the borrower can accept whatever subset of the offered loans. We use the model to discuss efficiency issues in competitive economies...
Persistent link: https://www.econbiz.de/10005042904