Extensive research has shown that few robust results regarding the optimal tax structure are available. Moreover, the stylised models used in optimal tax analyses are not appropriate for practical policy advice. This paper proposes a method of examining optimal marginal income tax reforms using...

It is a pleasure and privilege to be able to provide this commentary on Ian McDonald’s career in economics. It’s been my good fortune to have Ian as a teacher when I was a 2nd year student; as the supervisor of my Masters thesis; as my boss when I tutored Intermediate Macroeconomics; and...

A question central to R&D policy making is the impact of competition on cooperation. This paper builds a theoretical foundation for the dynamics of knowledge sharing in private industry. We model an uncertain research process and ask how the incentives to license intermediate steps to rivals...

Spillover and contagion eects have gained significant interest in the recent years of financial crisis. Attention has not only been directed to relations between returns of financial variables, but to spillovers in risk as well. I use the family of Constant Conditional Correlation GARCH models...

We examine a dynamic model of up-or-down problem solving. A decision maker can either spend resources investigating a new problem before deciding what to do, or decide based on similarity with precedent problems. Over time, a decision making framework, or jurisprudence, develops. We focus on the...

Direct tax structures are regularly revised and public debates over changes are typically heated. This is not surprising when it is realized that tax changes usually involve losers as well as gainers. Also, taxes affect the behaviour of individuals and families in ways that are not easy to...

How large are the gains from trade? Do all trade models have the ‘same old gains’? Arkolakis, Costinot, and Rodriguez-Clare (2012) show that many quantitative trade models that summarize trade responses via a single elasticity have the same welfare implications. I develop a flexible approach...

This paper presents a model and an experiment, both suggesting that wishful thinking is a pervasive phenomenon that aect decisions large and small. Agents in the model start out with state-dependent payos, and behave as if high-payo states are more likely. Subsequent choices maximize...

Globally, suicide has emerged as the second leading cause of death among youth aged 10-24 years old. In order to better understand the causes of this phenomenon, we investigate the relationship between suicidal ideation and cannabis use. Our empirical analysis is based on a 30 year longitudinal...

We develop and estimate a small open economy DSGE model to investigate the eectiveness of the Australian scal stimulus package introduced in the aftermath of the global nancial crisis (GFC). The timing and magnitudes of GFC shocks, scal shocks that mimic the stimulus transfers, and accommodative...