This paper studies dynamic non-linear taxation in a two-period model without government commitment and a continuum of agents with privately known skill parameters, which are constant overtime. The government is utilitarian but cannot commit at t=1 to the tax scheme that she will propose at t=2....

intertemporal distortions.

We characterize an environment in which agents have private information and trade in decentralized markets. First, we show that all the useful information is learned in the long run. Second, we show that agents with private information receive rents, and the value of information is positive....

updated as a function of the labor income and the previous balance.

We analytically and quantitatively examine a prominent justifi…cation for capital income taxation: goods preferred by those with high ability ought to be taxed. We study an environment where commodity taxes are allowed to be nonlinear functions of income and consumption and …find that, when...

This paper derives novel formulas for the welfare gains of any tax reform around initial (optimal or suboptimal) dynamic tax systems. We use a perturbation-based method to express these formulas in terms of easily interpretable and empirically estimable parameters: elasticities of income and...

Third, there is no general way to Pareto rank the equlibria.

In this paper, we generalize the notion of Pareto-efficiency to make it applicable to environments with endogenous populations. Two different efficiency concepts are proposed, P-efficiency and A-efficiency. The two concepts differ in how they treat people that are not born. We show how these...

This paper characterizes tax and debt dynamics in Ramsey plans for incomplete markets economies that generalize an Aiyagari et al. (2002) economy by allowing a single asset traded by the government to be risky. Long run debt and tax dynamics can be attracted not only to the first-best...

In this paper, we study optimal design of taxes and debt in the medium term in presence of domestic inequality and lack of commitment. We study an OLG economy in which individuals work and save for retirement when young. Government of the small open economy provides transfers to both the young...