The financing of higher education through public spending imposes a transfer of resources from taxpayers to university students and their parents. We provide an explanation for this phenomenon. Those who attend higher education will earn more income in the future and will pay more taxes. People...

Actual tax systems do not follow the normative recommendations of yhe theory of optimal taxation. There are two reasons for this. Firstly, the informational difficulties of knowing or estimating all relevant elasticities and parameters. Secondly, the political complexities that would arise if a...

In this paper we follow the tradition of applied general equilibrium modelling of the Walrasian static variety to study the empirical viability of a double dividend (green, welfare, and employment) in the Spanish economy. We consider a counterfactual scenario in which an ecotax is levied on the...

A signalling model is developed to investigate the consequences of corporate income taxation in the presence of adverse selection in the equity market. The model obtains a unique, informationally-constrained efficient equilibrium in which a better quality firm retains more inside-equity, and, as...

We examine whether minimum wages can fulfill a useful role as part of an optimal non-linear income tax scheme. In this setting, governments cannot observe household abilities, only their incomes. Redistributing according to income, the government is constrained by a set of incentive constraints....

Redistribution programs are constrained because those not working may be either unable to work, voluntarily unemployed or involuntarily unemployed. The inability to distinguish among these theree cases inhibits the targeting of transfers to those most in need. Enabling the government to monitor...

This paper studies the welfare effects of tax reforms moving in the direction of flat-rate taxation of income. The welfare impact of such reforms can be decomposed into two effects: (i) the increase in welfare associated with substitution among taxed commodities, and (ii) the loss in welfare...

An optimal commodity tax approach is taken to compare trade taxes and VATs when some commodities are produced informally. Trade taxes apply to all imports and exports, including intermediate goods, while the VAT applies only to sales by the formal sector and imports. The VAT achieves production...

This IPC Country Study by Robert Pollin and James Heintz examines three policy areas related to monetary policies in Kenya: inflation dynamics and the relationship between inflation and long-run growth; monetary policy targets and instruments; and exchange rate dynamics and the country?s...