Recent international agreements on tax data sharing aim to facilitate residence based taxation of capital and thus mitigate tax competition. I show that residence based capital tax rates can still decline with the number of financially integrated countries when public spending and debt are used strategically. While suboptimal in the steady state, strategic policies persist during transition if ...

This paper determines optimal public debt in a life cycle model with incomplete markets that matches the empirically observed variation consumption, labor, and savings. We find savings—not debt—equal to 168 percent of output is optimal, primarily due influence on household decision-making. By inducing lower interest rate, savings slow consumption leisure growth over an average household’s lifet...

Mutational studies directed at evaluating the effect of the axial ligand plane orientation on electrochemical properties of cytochrome b5 have been performed. As described in the previous paper, structural consequences of one of these mutations, the A67V mutation, have been evaluated using NMR solution methods. The lack of large shifts relative to the wild-type protein in both the imidazole Nde...

We study fiscal rules using a sovereign default model. A debt-brake (spread-brake) rule imposes ceiling on the deficit when debt (spread) is above threshold. For our benchmark calibration, similar gains can be achieved with optimal or spread brake. However, for “Union” of heterogeneous economies, common brake generates larger than Furthermore, from abandoning may significant economies that are ...

The challenge for stabilization policy presented by the COVID-19 pandemic stems above all from disruption of circular flow payments, resulting in a failure what Keynes (1936) calls “effective demand.” As consequence, economic activity many sectors can be inefficiently low, and interest-rate cannot eliminate distortions—not because limit on extent to which interest rates reduced, but reductions ...

Sovereign debt crises involve restructurings characterized by a mix of face value haircuts and maturity extensions. The prevalence extensions has been hard to reconcile with economic theory. We develop model endogenous restructuring that captures key facts sovereign episodes. While dilution pushes for negative extensions, three factors are important in overcoming the effects generating upon res...

We analyze how different budgetary rules affect the stability of an economy in a basic endogenous growth model with public debt and a state-dependent consumption tax rate. We show that a discretionary policy implies that the government violates its inter-temporal budget constraint along a balanced growth path, whereas a balanced budget rule guarantees that the economy is stable. A rule based de...

We study the implications of fiscal policy behavior for sovereign risk in a framework that develops a country’s fiscal limit, the point at which for economic or political reasons taxes and spending can no longer adjust to stabilize debt. A real business cycle model maps the economic environment—expected fiscal policy, the distribution of exogenous disturbances, and private agents’ behavior—into...

The present paper reassesses the role of monetary conservatism in a setting with nominal government debt and endogenous fiscal policy. We assume that macroeconomic policies are chosen by monetary and fiscal policy makers who interact repeatedly but cannot commit to future actions. The real level of public liabilities is an endogenous state variable, and policies are chosen in a non-cooperative ...

Analyzing International Monetary Fund (IMF) data, we find that overly optimistic growth expectations for a country induce economic contractions few years later. To isolate the causal effect, take an instrumental variable approach—exploiting randomness in allocation of IMF mission chiefs. We first document chiefs differ their individual degrees forecast optimism, yielding quasi-experimental vari...