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Different beliefs about how fair social competition is and what determines income inequality, influence the redistributive policy chosen democratically in a society. But the composition of income in the first place depends on equilibrium tax policies. If a society believes that individual effort...
Persistent link: https://www.econbiz.de/10005035829
Information regarding economic fundamentals is widely dispersed in society, is only imperfectly aggregated through prices or other indicators of aggregate activity, and can not be centralized by the government or any other institution. In this paper we seek to identify policies that can improve...
Persistent link: https://www.econbiz.de/10005013914
This paper studies the optimal trade-off between commitment and flexibility in an intertemporal consumption/savings choice model. Individuals expect to receive relevant information regarding their own situation and tastes - generating a value for flexibility - but also expect to suffer from...
Persistent link: https://www.econbiz.de/10005090888
The neoclassical growth model is augmented to study the macroeconomic effects of uninsured idiosyncratic investment risk. As compared to complete markets, the steady state is characterized by both a lower interest rate and a lower capital stock when the elasticity of intertemporal substitution...
Persistent link: https://www.econbiz.de/10005069284
This paper augments the neoclassical growth model to study the macroeconomic effects of uninsured idiosyncratic investment, or capital-income, risk. Under standard assumptions for preferences and technologies, individual policy rules are linear in individual wealth, ensuring that the equilibrium...
Persistent link: https://www.econbiz.de/10005027318
Different beliefs about the fairness of social competition and what determines income inequality influence the redistributive policy chosen in a society. But the composition of income in equilibrium depends on tax policies. We show how the interaction between social beliefs and welfare policies...
Persistent link: https://www.econbiz.de/10005571744
Persistent link: https://www.econbiz.de/10005588574
In recent years there has been a growing interest in macro models with heterogeneity in information and complementarity in actions. These models deliver promising positive properties, such as heightened inertia and volatility. But they also raise importantnormative questions, such as whether the...
Persistent link: https://www.econbiz.de/10005690480