This paper examines Ricardian equivalence in a world in which taxes are not lump sum, but are levied on risky labor income. It shows that the marginal propensity to consume out of a tax cut, coupled with a future income tax increase, can be substantial under plausible assumptions. Indeed, the MPC out of a tax cut can be closer to the Keynesian value that ignores the future tax liabilities than ...

This paper examines the impact of climate change on primary crops grown in Africa. An innovative approach is presented that bridges the gap between agro-economic and traditional Ricardian models. We label it a ‘structural Ricardian model’. It first captures the type of crop a farmer will select and then examines the conditional net revenue of that crop. The model is estimated using a sample of ...

The one-demand Hotelling model fails to explain the observed specialization of nonrenewable resources. We develop a model with multiple demands and resources to show that specialization of resources according to demand is driven by Ricardian comparative advantage while the order of resource use over time is determined by Ricardian absolute advantage. An abundant resource with absolute advantage...

The Taylor principle is quite usually considered as a central condition for price determinacy. Recently, however, this has been questioned on several grounds, notably because (i) this condition is a condition for local determinacy, not global determinacy (ii) it has been derived in “Ricardian” economies, and it appears that going to a nonRicardian framework makes a very big difference for the d...

We develop a dynamic stochastic general equilibrium model to examine how monetary policy shocks affect income inequality and the equity premium. The features Ricardian non-Ricardian households shows that tightening causes an endogenous redistribution of from non-Ricardians Ricardians. Ricardians’ consumption comoves more strongly with asset returns, giving rise high premia. extend our several f...

This paper investigates the effectiveness of matching grants to correct for interjurisdictional spillovers in the light of Bernheim general neutrality result. Indeed this result suggests that the usual argument that matching grants are needed to internalize the externality arising from the existence of interjuridictional spillovers is an artifact of the assumption that jurisdictions neglect the...