By preemptive austerity, we mean a policy that increases taxes to deter potential rollover crises. The policy is so successful that the usual danger signal of a rollover crisis, a high yield on new bonds sold, does not show up because the policy eliminates the danger. Mechanically, high taxes...

Entitlement programs have become an increasing component of total government spending in the US over the last six decades. To some observers, this growth of the welfare state is excessive and unwarranted. To others, it is a welcome counter-acting force to the rapid increase in income inequality....

We study equilibria in a heterogeneous-agent incomplete-market economy with nominal government debt and flexible prices. Unlike in representative agent economies, steady-state equilibria exist when the government runs persistent deficits, provided that the level of deficits is not too large. In...

A key contention in economics is the discrepancy between micro and macro elasticities of labor supply with respect to marginal tax rates. We revisit this question, focusing on the role of dynamic returns to effort among top earners. We develop a new model of earnings responses to taxes in the...

The US government is the dominant supplier of global safe assets and faces a downward-sloping demand for its debt. In this paper, we ask if the US exercises its market power when issuing debt and study its macroeconomic consequences. We develop a model of the global economy in which US public...

This paper uses the onset of COVID-19 to examine how countries construct their policy packages in response to a severe negative shock. We use several new datasets to track the use of a large variety of policy tools: announced fiscal stimulus (both above- and below-the-line), monetary policy...

Economists have studied the impact of numerous state laws, from welfare rules to voting ID requirements. Yet for all this policy evaluation, what do we know about policy diffusion--how these policies spread from state to state? We present a series of facts based on a data set of over 700 U.S....

A large literature has documented that fiscal policy is procyclical in emerging markets and developing economies and acyclical/countercyclical in advanced economies. This paper analyzes fiscal procyclicality in commodity-exporting countries. It first shows that the degree of fiscal...

This paper catalogues policies that have been deployed by jurisdictions seeking to mitigate the effects of tax competition. There are many instruments in this policy arsenal, since the tax base associated with a particular tax instrument may be affected by multiple policy choices, including some...

There is a consensus among economists that a carbon tax is the best approach for addressing the effects of CO2 emissions on the global climate. However, past international agreements on climate change instead specify caps on emissions (a quantity target) for each country. This paper explores...