This paper contributes to resolving the puzzle that in practice most countries use ad valorem (corporate income) taxation, while a large part of the tax competition literature views business taxes as unit (wealth) taxation. We point to the dual role that corporate taxation plays in attracting...

We introduce cross-border shopping and indirect tax competition into a model of optimal taxation. The Atkinson-Stiglitz result that indirect taxation cannot improve the efficiency of information-constrained tax-transfer policies, and that indirect taxes should not be differentiated across goods,...

We introduce intergenerational transfers into a general equilihrium life-cycle model in order to explain observed levels of wealth heterogeneity. In our overlapping generations model, heterogenous agents face uncertain lifetime and leave both accidental and voluntary bequests to their cinldren....

This paper analyzes sin goods consumption when individuals exhibit present-focused preferences. It considers three types of present focus: present-bias with varying degrees of naiveté, Gul-Pesendorfer preferences, and a dual-self approach. We investigate the incentives to deviate from healthy...

Optimal tax theory has diffculty rationalizing high marginal tax rates at the upper end of the income distribution. In this paper, I construct a model of optimal income taxation in which agents' preferences are interdependent. I derive a simple expression for optimal taxes that accommodates...

Empirical research based on the Bhaduri/Marglin-variant of the Kaleckian model has recently shown that aggregate demand in many medium-sized and large open economies tends to be wage-led in the medium to long run, even in a period of increasing globalisation. In this paper we extend this type of...

We study the effect of a declining labor force on the incentives to engage in labor-saving technical change and ask how this effect is influenced by institutional characteristics of the pension scheme. When labor is scarcer it becomes more expensive and innovation investments that increase labor...