Using a life-cycle model and a representative sample of households, we analyze the extent to which using home equity leads to (heterogeneity in) welfare gains over the life cycle. The most policy-feasible option to borrow against 50% of home equity over the life cycle leads to median (average)...

This paper investigates the impact of tax reforms on capital accumulation and welfare in both a model without habits (benchmark model) and a model with habits. In the benchmark model, the examined tax reforms generally lead to higher welfare. In contrast, in the model with habits the same tax...

In this paper we argue that very high marginal labor income tax rates are an effective tool for social insurance even when households have preferences with high labor supply elasticity, make dynamic savings decisions, and policies have general equilibrium effects. To make this point we construct...