This paper studies optimal taxation in a class of economies in which agents have dispersed private information regarding aggregate shocks (commonly-relevant fundamentals such as aggregate productivity and demand conditions). The dispersion of information opens the door to inefficiencies that...

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....

In this paper, we present a tractable model of a small open economy where the main driver of international borrowing is investment. Debt is non-state-contingent and the choice of default is endogenous, as in Eaton and Gersovitz (1981). By introducing a simple AK technology, we obtain a setup...

two mechanisms that implement the same allocation rule must yield the same expected payoffs to the agents and hence the same expected revenue regardless of the transfer scheme and of the information disclosed by the mechanism to the agents. We then use the result as a tool for designing profit...