We study a largely neglected channel through which government expenditures boost private consumption. We set up a lifecycle model in which households are subject to health shocks. We estimate a negative impact of public health care on household consumption dispersion, wealth and saving....

Some existing welfare programs (“work-first”) require participants to work in exchange for benefits. Others (“job search-first”) emphasize private job-search and provide assistance in finding and retaining a durable employment. This paper studies the optimal design of welfare programs...

The explicit consideration of households also seeks to make a contribution to the emerging literature on dynamic optimal taxation with private information. One of the basic tenets of this approach is that normative analyses of government policies should consider constraints deriving from...

A Welfare-to-Work (WTW) program is a mix of government expenditures on various labor market policies targeted to the unemployed (e.g., unemployment insurance, job search monitoring, social assistance, wage subsidies). This paper provides a dynamic principal-agent framework suitable for analyzing...

We study optimal bequest and capital taxation over the life-cycle in an OLG model. In this environment, we show that the efficient allocation can be implemented via age-dependent linear taxes/subsidies on capital income and bequests. First, as long as the degree of self-control problem is weakly...

Several frictions restrict the government s ability to tax assets. First of all, it is very costly to monitor trades on international asset markets. Moreover, agents can resort to non-observable low-return assets such as cash, gold or foreign currencies if taxes on observable assets become too...