Sandmo [1970] paper on general capital income risk to the case of risky capital taxation. In his framework the concept of a … mean preserving spread (MPS) is used for the risk analysis. In connection with risky taxes it is, however, possible to … explicitly connect the tax risk with the government's budget constraint. In this paper the concept of a budget balance preserving …

limitation of possible risk sharing via private contracts. The welfare consequences of a change in the tax system depend on the … relative magnitudes of increased risk sharing forced by the new tax system and the reduced risk sharing in private insurance … less risk sharing among individuals and lower ex-ante welfare …

progressive income tax in particular, provides insurance against the risk of uncertain future income. By providing for high taxes … function of the system, since it provides a direct risk-mitigation benefit to the taxpayer himself, rather than simply …. Income insurance, however, can be more effectively done by the federal government, because of its larger risk pool and better …

We study optimal fiscal policy in a small open economy (SOE) with sovereign and private default risk. The SOE …