Using a model with heterogeneous agents, this article demonstrates how public transfers affect physical as well as human capital accumulation. An increase in public income transfer from the rich agent to the poor agent will decrease (or increase) both physical and human capital accumulation if...

This article examines the effects of consumption taxation on capital accumulation, net foreign asset holdings, the trade balance, and welfare in a two-country overlap ping generations model. Government finances its lump-sum transfers by taxing consumption. An increase in the domestic consumption...