We formulate a model of continuous-time financial market consisting of a bank account with constant interest rate and one risky asset subject to capital gains taxes. We consider the problem of maximizing expected utility from future consumption in infinite horizon. This is the continuous-time version of the model introduced by Dammon, Spatt and Zhang [11]. The taxation rule is linear so that it...

In a second-best optimal growth setup with only factor taxes as available instruments, is it optimal to fully replace capital by labor income taxation? The answer is generally positive based on Chamley, Judd, Lucas, and many follow-up studies. In the present paper, we revisit this important tax reform-related issue by developing a human capitalbased endogenous growth framework with frictional l...

This paper proposes the introduction of a consumption-based corporate income tax in the European Union. Our proposal would guarantee neutrality regarding investment decisions and at the same time increase cost-efficiency. The proposal is based on the S-base cash flow tax, where transactions within the corporate sector are not at all taxable and only transactions between shareholders and corpora...

This paper uses a new, large-scale, dynamic life-cycle simulation model to compare the welfare and macroeconomic effects of five fundamental alternatives to the U.S. federal income tax: a proportional income tax, a proportional consumption tax, a flat tax, a flat tax with transition relief, and a progressive variant of the flat tax called the X tax. The model incorporates intragenerational hete...

This paper reassesses the burden of the current U.S. international tax regime and reconsiders well-known welfare benchmarks used to guide international tax reform. Reinventing corporate tax policy requires that international considerations be placed front and center in the debate on how to tax corporate income. A simple framework for assessing current rules suggests a U.S. tax burden on foreign...

This dissertation consists of three essays which investigate the economic implications of monetary and fiscal policies on the macroeconomy. The first essay focuses on the following question: how can we explain the observed behavior of aggregate inflation in response to e.g. monetary policy changes? Mankiw and Reis (2002) have proposed sticky information as an alternative to Calvo sticky prices ...

We use a general equilibrium model to study the impact of fully funding social security on the distribution of consumption across cohorts and over time. In an initial stationary equilibrium with an unfunded social security system, the capital-output ratio, debt-output ratio, and rate of return to capital are 3.2, 0.6 and 6.8%, respectively. In our rst experiment, we suddenly terminate social se...