This paper uses the theories of price discrimination and optimal taxation to investigate effects of underwater mortgages on foreclosures and the incentives to earn income, and the degree to which those effects are shaped by public policy. I find that the federal government's means-tested...

When asset values fall, the owners of collateralized loans are not in an enviable position. Nonetheless, they possess a kind of monopoly power over their borrowers that they do not possess when borrowers are solvent. Lenders maximize profits by price discriminating, but create deadweight costs...

Aggregate time series data are used to calculate the incidence of capital taxes. Part of the analysis is borrowed from the literature on sales tax incidence, comparing pre-tax interest rates with tax rates. The other part compares tax rates with after-tax interest rates, which are measured...

Financial economics research has suggested that expected returns are not the same across assets, and that their movements over time are not simply described or explained. I argue that this suggestion has implications for the study of substitution over time --namely that 'the' interest rate in...

I construct direct measures of labor-leisure distortions for the American economy during the period 1889-1996, using a new method for empirically evaluating competitive equilibrium models and extending that method to some noncompetitive situations. I then compare measured labor-leisure...

I suggest that the aggregate implications of indivisible labor are few, and subtle. First, I model behavior in an 'indivisible labor' environment like those of Diamond and Mirrlees (1978, 1986), Hansen (1985), Rogerson (1988), Christiano and Eichenbaum (1992) and show that aggregate behavior in...

It has long been suggested that trade unions take actions and favor public policies that reduce the quantity of labor so that union members might enjoy greater labor incomes. Can this explain the prevalence of generous public pension programs inducing retirement? I suggest not, by formalizing...

Does Social Security redistribute across cohorts? Or is it a program for purchasing the jobs' of the elderly? I formalize both models, showing how they have some predictions in common the most important of which is that generational accounts have the appearance of a pyramid scheme.' I also...

I show that the indivisible labor' models of Diamond and Mirrlees (1978, 1986), Hansen (1985), Rogerson (1988), Christiano and Eichenbaum (1992), and many others are, when aggregated across persons with the same marginal utility of income, equivalent to the divisible labor model of Lucas and...

Most studies of the intertemporal substitution of work use life cycle data and, from those studies, many have concluded that intertemporal labor substitution is unimportant for macroeconomics. This paper takes another look at life cycle data and argues that a consideration of measurement errors,...