We analyze optimal taxation of labor and capital income in a life-cycle framework with idiosyncratic income risk. We … independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear … capital tax is non-zero and trades off redistribution and insurance against savings distortions. Our quantitative results …

Most contributions to optimal tax theory have assumed that all prices, including that of leisure, are known with … paper begins with a discussion of the positive theory of wage taxation and labor supply under uncertainty. This is followed …

-household income insurance mechanism strongly biases upward the welfare losses from idiosyncratic wage risk as well as the desired …

facing uninsurable idiosyncratic labor income risk. The Ramsey government internalizes the general equilibrium feedback of … optimal aggregate saving rate is independent of income risk. The optimal time-invariant tax on capital is increasing in income … risk. Its sign depends on the extent of risk and on the Pareto weight of future generations. If the Ramsey tax rate that …

This paper studies Pareto-optimal risk-sharing arrangements in a private information economy with aggregate uncertainty … result can be extended to dynamic settings in the sense that, in this case, only savings need to be distorted, but not trades …

when households have preferences with high labor supply elasticity, make dynamic savings decisions, and policies have … labor productivity risk, show that it has a wealth distribution that matches the data well, and then use it to characterize …

response to earnings risk based on Euler equation estimates. To address endogeneity problems, we use Norwegian administrative …

(and the coefficient of relative risk aversion) from regressions of consumption growth on uncertainty in consumption growth … imply estimates of prudence and risk aversion that are unrealistically low. Using numerical solutions to a fairly standard …