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...

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...