This paper examines two tax regimes in a world where abilities to earn differ. It compares the distributions of utilities under a “flat” tax regime where all income is subject to a common tax rate, and proceeds finance a common transfer paid to all, with one with a menu of tax rates and...

The payment of bonuses can bring big benefits. But harm, too, can result. In the financial sector, this is especially true, above all when they are related to noisy indicators of performance over brief periods. This paper starts by exploring these ideas, then proceeds to examine credit rating...

Despite its varying pattern of cyclical ups and downs, the British economy has, on average,grown at 2.5% per year for six decades, with minimal breaks in trend. So history warns us that government policies to change that trend may have little effect. There is a bit more movement in the trend...

In his essay on public credit, Hume advances two arguments in favour of government borrowing and five against. It is interesting to cast his various arguments.

This paper scrutinizes the economic case for adopting a system of macroprudential regulation, the instruments that may be available to conduct it, and the practical implications for policy.

This paper explores the issue of whether rates of interest should and do tend to exceed rates of growth, a key determinant of debt sustainability. It goes on to consider the argument for debt renegotiation in circumstances where sustainability is in grave doubt.

This paper poses, and then attempts to answer, eleven questions about the principles and practice of inflation targeting under contemporary conditions.

This paper endeavours to illustrate the consequences of a credit squeeze by inserting a standard model of retail banks into some familiar macroeconomic models. Some possible policy conclusions are drawn about the benefits of incentives to increase lending at these times, and to reduce it in much...

This paper explores a number of issues about how inflation may be targeted, and draws some inferences about how this might best be done for a middle-income emerging economy.