This paper presents an analytically tractable continuous-time general equilibrium model with investment irreversibility and fixed adjustment costs. In the model, there is a continuum of firms that are subject to idiosyncratic shocks to capital. Although the presence of investment frictions...

Creation of optimal tax and budget systems is one of the Difficult problems of economic science. One of the most important areas of tax reform is to develop a tax code in the aspect of optimal tax gravity. The new tax code - a step to improvement, since a number of reduced taxes and simplified...

The paper studies optimal redistributive taxation when the government cannot commit the future policy. The framework used is one in which individuals can revise their consumption-savings decisions slightly more often than the government can change tax policy.

In this article we define a Recursive Competitive Equilibrium, provide an example and review the related literature. The article is an entry prepared for The New Palgrave: A Dictionary of Economics, 2nd Edition (Palgrave Macmillan: New York).

The early contributions to the economic literature on this sub- ject assume that only market goods yield utility, and that the only way adults can secure the consumption of these goods in old age is by saving. More recent contributions recognize that the elderly derive utility also from the care...

The school-to-work transition represents a long dark tunnel for too many young people all over the world. Nonetheless, cross-country differences are striking: in Germany, young people fare no worse than their adult counterparts, while in the South- and Eastern-European Union countries young...

I document a strong negative cross-country correlation between intergenerational earnings persistence and tax progressivity, and between intergenerational earnings persistence and public expenditure on tertiary education. To explain these correlations I then develop an intergenerational...

I document a strong negative cross-country correlation between intergenerational earnings persistence and tax progressivity, and between intergenerational earnings persistence and public expenditure on tertiary education. To explain these correlations I then develop an intergenerational...

We extend Modigliani and Miller's capital structure models by adding government as the third major financial stakeholder. Government, through collection of taxes, joins equityholders and debtholders as recipients of the firm's net operating income. Assuming no new investment opportunities, we...

We extend Modigliani and Miller's value conserving capital structure model by adding government as the third major financial stakeholder, through collection of taxes. We demonstrate that the burden of corporate taxation eventually falls on shareowners. By shifting the tax incidence to...