We present a dynamic general equilibrium model with agency costs, where heterogenous firms choose among two alternative instruments of external finance - coporate bonds and bank loans. We characterize the financing choice of firms and the endogeous financial structure of the economy. The...

The goal of this paper is to examine the shape of the Laffer curve quantitatively in a simple neoclassical growth model calibrated to the US as well as to the EU-15 economy. We show that the US and the EU-15 area are located on the left side of their labor and capital tax Laffer curves, but the...