This paper studies a simple monetary growth model with debt and deficits to investigate the effects of various polices on output and inflation when the central bank is `tough.' In sharp contrast to the vast literature which implicitly or explicitly assumes fiscal dominance regime, in which the...

The paper studies the equilibrium size of countries. Individuals in small countries have greater influence over the nature of political decision making while individuals in large countries have the advantage of more public goods and lower tax rates. The model implies that (i) there exists...

This paper analyzes the influence of exchange rate regimes on fiscal performance, focusing on the difference between fixed and flexible exchange rates. For these ends, a sample of 83 countries for the 1974-1998 period, the GMM methodology for dynamic proposal panel models proposed by Arellano...

This paper analyzes the macroeconomic and welfare effects of population aging and Social Security reform. First, a stochastic overlapping-generations model with heterogeneous agents is carefully extended to an aging society. The model uses the intermediate population projection of the Trustee...

Three basic mechanisms are behind the statistical relationship between fertility decisions and labor force participation decisions. 1) Causal direct effect: the time spent in child-care reduces the labor market effort leading to a temporary drop in post-birth labor force participation. 2) Causal...

This paper explores the relationship between city size and the pattern of unemployment rate fluctuations. We present a model of the local labor market in which in a thicker market, when more workers are looking for jobs and more job openings are available, the matching probability between jobs...

Entre 1984 y 2002 se presentó una caída permanente en la propo0rción de hogares colombianos que utilizan personal asalariado para trabajo doméstico. Utilizamos un modelo teórico de la decisión del hogar de tener o no tener servicio doméstico y estimamos dicha probabilidad. Ésta se ve...

Many firms provide training to newly recruited employees in order to improve their productivity. This occurs in spite of the fact that the skills acquired by the workers are valuable in competing establishments, which may make offers to those workers and bid them away. Recent research suggests...

Modern theories of government finance stress the importance of an economy’s fiscal deficits in determining the course of monetary policy. Modern growth theory stresses the role of monetary factors in economic growth. This paper explores how these two are interrelated, using a simple AK...

This paper studies an international tax policy design problem by employing a two-country dynamic general equilibrium model with incomplete asset markets. We investigate the possibility of welfare-improving active tax policies, in particular capital and labor income tax, under the non-cooperative...