Heterogeneous firm productivity raises the question of whether governments should pursue `pick-the-winner' strategies by subsidizing highly productive firms more, or taxing them less, than their less productive counterparts. We study this issue in a setting where governments can set...

Governments worldwide use targeted tax policies to trade off the gains from increased FDI against the cost of excessive profit shifting by multinational firms. We show that optimal tax systems generally incorporate both thin capitalization rules, which tax discriminate between purely national...

Several countries have recently introduced national capital standards exceeding the internationally coordinated Basel III rules, which is inconsistent with the `race to the bottom' in capital standards found in the literature. We study regulatory competition when banks are heterogeneous and give...