This paper studies some policy implications of the habit persistence model of Harl E. Ryder and Geoffrey M. Heal (1973) for a small open economy. It is shown that often the policy implications of the model that are consistent with the findings in the asset pricing literature are in conflict with...

This paper studies the effects of budget deficits financed by taxing corporate incomes. As households are finitely lived, transfers and taxes on personal incomes are discounted at a higher rate than the interest on government debt. As corporations are infinitely lived, taxes on corporations are...