I study a principal-agent problem in which the principal can obtain additional costly information about the agent's effort. I analyze this problem in the context of optimal unemployment insurance a la Hopenhayn and Nicolini (1997), where job-search effort is private information. I calibrate the...

There is a strong correlation between the corporate interest rate spread and the unemployment rate.We make two contributions to the literature based on this observation. First, we model the mechanisms by which these financial conditions can affect unemployment in a DMP model with capital....

We bring together the theories of duality and dynamic programming. We show that the dual of a separable dynamic optimization problem can be recursively decomposed. We provide a dual version of the principle of optimality and give conditions under which the dual Bellman operator is a contraction...

3.Finally we consider the case where the government's information is even more limited, as not only the linear taxes on trades but also the lump-sum tax cannot depend on the ex-post realization of the individual income shocks. In this case the second best cannot typically be attained, but we...

We provide a characterization of the optimal UI scheme in the presence of layoff risk and hidden wealth. The optimal transfer scheme we propose is such that unemployed agents are liquidity constrained and re-employment taxes are independent of previous employment history. Past history is however...

The explicit consideration of households also seeks to make a contribution to the emerging literature on dynamic optimal taxation with private information. One of the basic tenets of this approach is that normative analyses of government policies should consider constraints deriving from...

is monotone in output. We also investigate a few possibilities of relaxing these requirements.

Several frictions might prevent (or make undesirable) the full taxation of savings. Due to international capital mobility, for instance, the government may not have perfect control over agent's saving and consumption decisions. We show in this paper that a restricted ability to tax savings has...

We study optimal bequest and capital taxation over the life-cycle in an OLG model. In this environment, we show that the efficient allocation can be implemented via age-dependent linear taxes/subsidies on capital income and bequests. First, as long as the degree of self-control problem is weakly...