This paper examines a dynamic stochastic economy with a benevolent government that cannot commit to its future policies. I consider equilibria that are time-consistent and allow for history-dependent strategies. A new numerical algorithm is developed to solve for the set of equilibrium payoffs....

In this paper we explorer the computation and simulation of stochastic overlapping generation (OLG) models. To do so we compute all Markovian equilibria adopting a recently developed numerical algorithm. Among the models we studied, the inde- terminacy in deterministic OLG model results in many...

This paper analyzes the effects of time-consistent capital taxation on the level of capital and welfare. We find that a commitment to a zero capital tax shifts the time inconsistency problem towards labor taxes and the provision of public consumption. By comparing the worst time-consistent...

In this paper I employ a dynamic general equilibrium model to study macroeconomic effects and welfare implications of alternative reforms to the U.S. health insurance system. In particular, I focus on to what extent a health care reform can reduce inefficiency originating from market...

In this paper I employ a dynamic general equilibrium model to study macroeconomic effects and welfare implications of health policies for universal coverage in the U.S. The model is calibrated to the U.S. data. Numerical simulations indicate that adopting universal coverage has several important...

This paper examines a dynamic stochastic economy with a benevolent government that cannot commit to future policies. Following Phelan and Stacchetti (2001), we consider sequential sustainable equilibria (SSE). We numerically solve for the set of equilibrium payoffs, and investigate whether the...