A study of the welfare implications of some basic structural features of the U.S. tax code, including the tax deductibility of depreciation and the practice of taxing labor income differently than capital income. The results show that long-run welfare and output can be improved by a policy of...

A presentation of a dynamic general-equilibrium model with productive public capital to help account for differences in the business cycle characteristics of public- versus private- sector expenditures in postwar U.S. data.

The development of a real business cycle model in which government fiscal variables such as tax rates and public expenditures are endogenous. The authors characterize the "optimal" behavior of these policy variables over the business cycle and relate this behavior to movements in private-sector...

An argument that stabilization produces welfare levels nearly identical to those of welfare maximation, and that both these policies yield large welfare gains and modest growth losses relative to growth maximization policies.

A demonstration that the assumed structure of taxation can have dramatic effects on economic welfare and on the stability of the steady state in a dynamic general-equilibrium model of optimal fiscal policy. The authors find that household welfare is highest under a structure that includes...

An examination of the business cycle implications of productive public capital in a two-sector, dynamic general-equilibrium model with optimal fiscal policy. In simulations, public investment and public consumption move procyclically, and the capital tax is more variable than the labor...

A presentation of a quantitative-theoretical model that can account for much of the behavior of the stock of public capital in the U.S. economy over the last 70 years, with an application to examining some possible causes of the slowdown in the growth of U.S. labor productivity.