Current analysis addresses an apparently critical issue of wealth circulation in the society. We try to play a game with the welfare- related burden of taxation. Thus, the Negotiator No.1 stands up for citizens legal and moral rights to social services. The Negotiator No.2 proceeds from the...

We argue that labor mobility does not lead to a ''race to the bottom,'' where countries drastically cut redistributive transfers in order to attract skilled workers. The basis of our argument is that these cuts are not credible policies. We propose a two country model where competition for...

This paper considers the existence of bad equilibria in a random auditing tax model with limits on the number of households which can be audited. Specifically, we present sufficient conditions for a tax-audit mechanism which has truth telling as one equilibrium to have other equilibiria in which...

We summarize the main features and results of the literature on marginal commodity tax reforms as initiated by Ahmad and Stern (1984) and developed further by Yitzhaki and Thirsk (1990). We establish new links with other fields of research, namely the literature on the use of equivalence scales...

Current analysis addresses an apparently critical issue of wealth circulation in the society. In the form of three persons game, we put the welfare-related burden on taxpayers. The Negotiator No.1 stands up for citizens’ legal and moral right to social services. The Negotiator No.2 proceeds...

Current analysis addresses an apparently critical issue of wealth circulation in the society. In the form of three persons game, we put the welfare-related burden on taxpayers. The Negotiator No.1 stands up for citizens’ legal and moral right to social services. The Negotiator No.2 proceeds...

Current analysis addresses an apparently critical issue of wealth circulation in the society. In the form of three persons game, we put the welfare-related burden on taxpayers. The Negotiator No.1 stands up for citizens’ legal and moral right to social services. The Negotiator No.2 proceeds...

In this paper we address the time-inconsistency of optimal debt policy—the incentive for a current government to “manipulate interest ratesâ€â€”raised in Lucas and Stokey’s celebrated 1983 paper. The literature that followed suggested various ways to fully overcome...

Where the state evolves according to a discrete-state Markov chain, we sustain Lucas and Stokey's debt structure dynamics by having it emerge sequentially as the unique outcome of a sequence of choices made by two sequences of independent government departments. Each period a tax authority sets...

All developed countries have government debt, usually a sizeable proportion of output. This paper proposes that governments that cannot commit to future policy choices face a trade-off that explains the level of debt. On the one hand, the government would like to increase debt and delay...