According to a widely held belief, all who are able to work, should workʺ. We consider this statement within a framework of non-linear taxation. The crucial difference between our model and the standard model is that the government can distinguish between productive persons and the disabled. A...

In the present work we investigate how the state of credit markets non-linearly affects the impact of fiscal policies. We estimate a Threshold Vector Autoregression (TVAR) model on U.S quarterly data for the period 1984-2010. We employ the spread between BAA-rated corporate bond yield and...