Summary Diba and Grossman (1987) demonstrated that the conception of a rational bubble as defined by Blanchard and Watson (1982) is impossible. The present paper shows that this impossibility theorem also applies under various imperfections and irrationalities. These are: sticky goods prices,...

The notion that US stock prices follow a pattern that is synchronized with the rhythm of presidential elections has been a topic among financial investors for a long time. Academic work exists that supports this idea, quantifies the pattern, and has demonstrated its robustness over several...

Swiss banking secrecy laws not only tempt foreign investors to remain silent about at least part of their capital incomes and, thus, not pay taxes as obliged by law. Therefore, Switzerland introduced a withholding tax on capital income in 1934, primarily in order to coerce domestic residents to...

We analyze a multi-country model in which a small group of countries adopts banking secrecy (BS) laws and a withholding tax. The other group doesn't. BS countries benefit in all relevant macroeconomic variables, including taxes and the provision of public goods. In non-BS countries most of the...

We analyze an overlapping-generations world comprising two groups of small countries whose preferences for public spending differ. Key steady-state effects from introducing bank secrecy and a withholding tax in countries with low government spending are: a reduction of global capital and income,...