This paper evaluates the quantitative impact of capital liberalization on the taxation structure and welfare of the liberalizing countries when governments conduct fiscal policy optimally but without commitment (time-consistent policies). The transition from a regime of capital autarky to a regime of free mobility leads to a decrease in the long-term tax rate on capital of 13 percent and an inc...

Fixed-path methods (FPMs) were introduced to manage situations where several individuals jointly operate a single technology (see [4]). In the production context, they consist in allocating marginal increments of output according to a proportions vector which changes along an arbitrary path. While very appealing from an incentives viewpoint under diminishing marginal returns, the asymmetry of t...

By constructing a dynamic general equilibrium model this paper studies the optimal pollution emission and abatement policies for a small economy. We show that in autarky government issues an optimal level of emission permits but its optimal abatement level is zero at the unique steadystate equilibrium. On the other hand, government employs an optimal two-dimensional policy with free trade if th...

The present paper examines the effectiveness of financial overcompensation as a means to enhance customer loyalty after a product failure. Overcompensation implies that customers are entitled to a refund that is larger than the purchase price. It is, however, still unclear whether large overcompensations entail saturation effects, or alternatively, result in an actual drop in customer loyalty. ...

We propose and analyze a two-country model of endogenous innovation cycles. In autarky, innovation fluctuations in the two countries are decoupled. As the trade cost falls and intra-industry trade rises, they become synchronized. This is because globalization leads to the alignment of innovation incentives across firms based in different countries, as they operate in the increasingly global (he...

Price volatility is a major issue in liberalized electricity markets as far as risk management is concerned. In this paper we evaluate the impact of the Portuguese and Spanish electricity markets integration on the day-ahead market price volatility. For that purpose we develop an adaptive conjectural variations model which is implemented in GAMS language. We estimate the degree of competition i...

With the transition towards renewable energy underway, demand-side management together with local generation of is receiving growing attention. Optimizing self-consumption locally produced can not only have financial benefits for respective household or business (and improve their autarky from increasingly unstable markets), but also help grid stability against volatility some sources energy. I...

It is well-known that within-cohort consumption inequality increases with age in developed countries and this pattern is consistent with the permanent income hypothesis, under which households smooth consumption through credit markets in the short-run against transient shocks and in the medium-run over the life cycle. This paper provides evidence regarding the age effects in within-cohort inequ...

We develop a two-country, two-sector model of trade where the only difference between the two countries is their distribution of human capital endowments. We show that even if the two countries have identical aggregate human capital endowments the pattern of trade depends on the properties of the two human capital distributions. We also show that the two distributions of endowments also complet...