This paper presents a simple model of market equilibrium to explain why firms that maximize the value of their shares pay dividends even though the funds could instead be retained and subsequently distributed to shareholders in a way that would allow them to be taxed more favorably as capital...

Given that application of the principle with full loss offset to all assets is impracticable, we may wish to consider provision of only a partial inflation-exclusion to assets for which it is feasible. The problem is examined in this paper by means of a simple model of anticipated inflation, in...

The purpose of the present paper is to focus on the potential inducement to retire earlier in the presence of social security and on the implied effects on lifetime savings. This problem is analyzed within the framework of a model of intertemporal utility maximization. The organization of this...

Three main types of mortgages are fixed interest contracts which automatically fall due on the sale of a dwelling, fixed rate loans which are assumable by a buyer, and floating rate instruments. When interest rates rise, the fall in the economic value of these assets in savings and loan...

A century ago, everyone thought time and distance were well defined physical concepts. But neither proved absolute. Instead, measures/reports of time and distance were found to depend on one's reference point, specifically one's direction and speed of travel, making our apparent physical...

Between-family differences in expenditures and output reflect the effect of simultaneous increases in children's ability on the willingness of parents to transfer resources to them. Within-family differences also reflect the attitudes of parents toward disparity among children. In this paper we...

This paper examines the appropriate tax treatment of the family in a series of analytical models and numerical examples. For a population of taxpaying couples which differ in earning capacity, we derive the optimal tax rates for each potential earner. These rates depend crucially upon own and...

The purpose of the present note is to explore the structure of optimal income taxation/redistribution in an economy where the welfare of individuals depends in part on relative after-tax consumption, i.e., we specify individual welfare as a function of absolute and relative after-tax...

A sharp increase in the real interest rates in the U.S. in the 1980s was expected to induce a higher personal saving rate. Actually, between 1981 and 1983 the personal saving rate fell from 7.5 percent to 5.4 percent and for the 1985-1988 period it had averaged only 4 percent even though real...

A central mission of public economics has been to determine policies that optimize utilitarian welfare. To improve the realism of policy evaluation, it is desirable to enrich understanding of behavior and develop methods of analysis that use the enriched understanding to assess policies....