In a second-best optimal growth setup with only factor taxes, it is in general optimal to fully replace capital by labor income taxation in the long run. We revisit this important issue by developing a human capital-based endogenous growth model with frictional labor search, allowing each firm...

Cigarette smoking leads to large healthcare and morbidity costs, and mortality losses, and smoking cessation plays a key role in reducing health risk and economic costs. While medical evidence suggests that some smokers are more likely to respond to medication treatment than others depending on...