This paper evaluates the effects of optimal Ramsey rules for government expenditure (investment in physical and human capital) and revenue (taxes on labor and capital income) on welfare, debt stabilization, output and factor shares. The real macroeconomic model is calibrated and estimated to...

Intro -- Contents -- I. INTRODUCTION -- II. LITERATURE REVIEW -- III. EMPIRICAL STRATEGY -- IV. RESULTS -- V. CONCLUSIONS -- Appendix I. Compensation Share -- Appendix II. A First Pass at Data: Bivariate Regression Results -- Appendix III. Correlation Matrix of Explanatory Variables -- Appendix...

The past two decades have seen a decline in labor''s share of national income in several industrial countries. This paper analyzes the role of three factors in explaining movements in labor''s share--factor-biased technological progress, openness to trade, and changes in employment...