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...

We consider an economy where individuals face uninsurable risks to their human capital accumulation, and study the problem of determining the optimal level of linear taxes on capital and labor income together with the optimal path of the debt level. We show both analytically and numerically that...

This paper develops a growth theory that accounts for the evolution of trade policy, underlying internal class conflicts, and global income divergence over the last few centuries. By analyzing political responses to the distributional effects of international trade, this paper finds a prominent...

We extend the model of risk sharing with limited commitment (Kocherlakota, 1996) by introducing both a public and a private (non-contractible and/or non-observable) storage technology. Positive public storage relaxes future participation constraints and may hence improve risk sharing, contrary...

Many resource-rich countries have negative genuine saving rates, so deplete their exhaustible natural resource wealth faster than they build up wealth in other assets. This phenomenon is stronger in more fractionalized countries with poor legal systems. We explain this by a power struggle about...

We provide empirical evidence on the effects of tax liability changes in the United States. We make a distinction between “surprise” and “anticipated” tax shocks. Surprise tax cuts give rise to a large boom in the economy. Anticipated tax liability tax cuts are instead associated with a...

This study focuses on the formation of in-kind labour income in Russia. Using 1994 data on individuals, and raises two questions. Firstly about the distributive impact of social transfers from enterprises, and secondly about the effect of fringe benefits on individuals' well-bening.

We develop a dynamic general equilibrium model with two-sided limited commitment to study how barriers to competition, such as restrictions to business start-up, affect the incentive to accumulate human capital. We show that a lack of contract enforceability amplifies the effect of barriers to...

Existing methods of reconstructing historical Euro-zone data by aggregation of the individual countries' data raises numerous difficulties due to past exchange rate changes. The approach proposed here is designed to avoid such distortions, and aggregate exactly when exchange rates are fixed. In...

A money demand relationship for Italy is estimated from 1970 to 1994 within a cointegrated VAR framework. Changes in the money market fue to an important financial innovation process are introduced in the cointegration space through a Logistic Smooth Transition function tested and estimated at...