This paper presents a simple model of risk-averse banks that face uncer-tainty over funding conditions in the money market. It shows when increasedfunding uncertainty causes interest rates on loans and deposits to rise, whilebank lending and bank pro…tability fall. It also …nds that funding...

Carbon leakage is a major concern for policymakers involved with environmentalinitiatives such as the European Unions emissions trading scheme and similar cap-and-trade proposals in the United States, Australia, and elsewhere. This paperprovides a framework for understanding the drivers...

Market share objectives are prominent in many industries, especially where man-agers pay much attention to league table rankings. This paper explores the strategicrationale for giving managers incentives based on market share in an oligopoly com-peting in strategic substitutes. Moreover, the...

Time consistency problems can arise when environmental taxes are employedto encourage firms to take irreversible abatement decisions. Setting a high carbontax, for instance, would induce firms to invest in low-carbon technology,yet once investment has occurred the government can then reduce the...

The paper presents a monetary policy model with an endogenous capital stock when a backwardlooking element in wage setting causes inflation persistence. We analyse how the endogeneityof the capital stock changes the macroeconomic dynamics with which policy interacts and itsimplications for...

Probably the most enduring result in the theory of optimum income taxation is that,for a sufficiently thin upper tail to the skill distribution, the marginal tax rate shouldfall rather than rise with income. This paper shows that this result is highly sensitiveto a very strong informational...