Growth is associated with (i) shifts in the sectoral structure of the economy, (ii) changes in relative prices and (iii) the Kaldor facts. Moreover, (iv) cross-sectional data shows systematic differences in the expenditure structure across income groups. This paper presents a growth model which...

What are the dynamic consequences of comprehensive integration shocks? The answer to this question appears all but trivial. We set up a dynamic macroeconomic model of a small open economy where both capital and labor are mobile and there are increasing returns to scale at the aggregate level....

We examine how basic research should be financed. While basic research is a public good benefiting innovating entrepreneurs it also affects the entire economy: occupational choices of potential entrepreneurs, wages of workers, dividends to shareholders, and aggregate output. We show that the...

This study investigates the allocation and effect of technology subsidies on R&D activities and technology acquisitions of Chinese domestic firms. We exploit novel firm data which includes information on subsidies, R&D, patents, trade, and balance sheet indicators. Conditional...

Empirical studies show that job search behavior depends on the financial situation of the unemployed. Starting from this observation, we ask how unemployment insurance policy should take the individual financial situation into account. We use a quantitative model with a realistically calibrated...

This paper contributes to resolving the puzzle that in practice most countries use ad valorem (corporate income) taxation, while a large part of the tax competition literature views business taxes as unit (wealth) taxation. We point to the dual role that corporate taxation plays in attracting...

This paper explores the implications of gender-based income taxation in a non-cooperative model of a couple's time allocation between market work and providing a household public good. We find that the optimal structure of differential taxation by gender is solely determined by spouses' relative...

This paper analyzes to what extent tax planning impacts on the level of the inheritance tax rate perceived as fair. In a factorial survey conducted in Germany it finds out that tax planning increases the fair tax rate by roughly 4 percentage points. The fair tax rate is not only determined by...

Economic thought on climate policy as an instance of environmental regulation is strongly influenced by the principle of a uniform carbon price. Economists acknowledge that this principle breaks down in a second-best world with other distortions, such as taxes and market power in domestic and...

How is the optimal level of Pigouvian taxation influenced by distributive concerns? With second-best instruments, a higher level of income redistribution calls for a lower level of Pigouvian taxation. More redistribution implies higher distortions from income taxation. Pigouvian tax revenues...