Focusing on tax policy with incomplete asset markets, we create a framework for proving the existence of Pareto improving taxes, for computing them, and for bounding the improvement.The protagonist is the price adjustment following an intervention. If the price adjustment is sufficiently...

The existence of collateral requirements to the exchange of securities in general reduces the efficiency of competitive equilibria. The general equilibrium analysis is presented in a world where reputation plays no role, and the lender always expects a future payment equal to the minimum between...

In a seminal paper, Ross (Q J Econ 90:75-89, 1976) shows that if security markets are resolving, then there exist (non-redundant) options that generate complete security markets. Complementing his work, Aliprantis and Tourky (2002) show that if security markets are strongly resolving and the...

In this paper, we investigate the existence of multiperiod American options generating dynamically complete markets. We show that if a primitive security separates states at the terminal date, then generically there exist multiperiod American options on that security generating dynamically...

A new measure of constrained efficiency for application in economies with incomplete markets is presented. This measure — termed Allais-Malinvaud efficiency — can be viewed as adjusting for market incompleteness not fully captured in previous work. It is shown that equilibrium allocations in...

The total face amount of terminated life insurance in the U.S. amounts to over two trillion dollars per annum. Little known is that, instead of allowing insurance carriers to pocket the premiums paid until termination and avoid the death claim, many policyholders may realize their policies'...

Incomplete markets in overlapping generations leave room for Pareto improvement. We analyze a model with two goods and idiosyncratic shocks. We compare market equilibrium with the constrained efficient equilibrium allocation and demonstrate that, when shocks are symmetric and do not affect all...

Recent revelations on the use of fiduciary services by the wealthy and political leaders raise concerns regarding the use of such services for tax and creditor evasion. Yet given the secrecy shrouding much of the fiduciary industry, we do not know which fiduciary services are used for such...

We study how transparency, modeled as information about one's counterparty liquidity needs, affects the functioning of an over-the-counter market. In our model, investors hedge endowment risk by trading bilaterally in a search-and-matching environment. We construct a bargaining procedure that...

In the early stages of the process of industry evolution, firms are financially constrained and might pay different wages if workers have heterogeneous expectations about the prospects for advancement offered by each firm's job ladder. This paper argues that, nevertheless, if the output market...