In this article we write a two period taxation model where: \QTR{it}{i)} private information changes through time; \QTR{it}{ii)} savings choices by an agent that are not observed, \QTR{it}{iii)} affect preferences conditional on the realization of types. The simultaneous appearance of these three...

Liquid markets where agents have limited capacity to sign exclusive contracts, as well as imperfect knowledge of previous transactions by others, raise the following risk: An agent can promise the same asset to multiple counterparties and subsequently default. I show that in such markets an...

State governments finance their expenditures with multiple tax instruments, so when collections from one source decline, they are typically compensated by greater revenues from other sources. This paper addresses the important question of the extent to which personal and corporate income taxes...

This paper examines the optimal (first-best) fiscal policy in a stochastic representative agent model that exhibits a ``keeping up with the Joneses'' utility function and imperfectly competitive product markets. We find that the optimal labor tax is a constant, whose sign is determined by the...

We give two procedures for determining whether efficient Pareto improving local changes are possible. When they are, the procedures compute for them. Any procedure generating efficient and Pareto improving changes can be replicated by these procedures. The two programs form a striking duality....

State governments finance their expenditures with multiple tax instruments, so when collections from one source decline, they are typically compensated by greater revenues from other sources. This paper addresses the important question of the extent to which personal and corporate income taxes...

Efficient investment in human capital is a subject of great concern among economists. By means of an overlapping-generations macrodynamic model with credit constraints, imperfect insurance and exogenous labor supply, we appraise inefficiencies related to misinvestment in human capital and...

When asset markets are incomplete there are almost always many Pareto improving policy interventions. Remarkably, these interventions do not involve adding any new markets. Focusing on tax policy, I create a framework for proving the existence of Pareto improving taxes, for computing them, and...

The analysis of economies of specialization at the individual level by Yang & Shi (1992) and Yang & Ng (1993) is combined with the Dixit & Stiglitz (1977) analysis of monopolistic-competitive firms to show that, ignoring administrative costs and indirect effects (such as rent-seeking), even if...

Efficient investment in human capital is a subject of great concern among economists. By means of an overlapping-generations macrodynamic model with credit constraints, imperfect insurance and exogenous labor supply, we appraise inefficiencies related to misinvestment in human capital and...