I study the effects of long-run inflation and income taxation in an economy where households face uninsurable idiosyncratic risks. I construct a tractable competitive search framework that generates dispersion of prices, income and wealth. I analytically characterize the stationary equilibrium and the policy effects on individual choices. Quantitative analysis finds that monetary and fiscal pol...

Taxation is known to be the most cost-effective tobacco control measure available to governments throughout the world. Higher tobacco taxes are also referred to as 'win-win' policies because they generate extra government revenue while at the same time reduce long-term tobacco consumption. Many health professionals have therefore been advocating for higher levels of tobacco taxation on public h...

We set up an OLG-model, where households both choose human capital investment and decide on investing their endogenous savings in a portfolio of riskless and risky assets, exposing them to (aggregate) wage and capital risks due to technological shocks. We derive the optimal public policy mix of taxation and education policy. We show that risks can be efficiently diversified between private and ...

We show how to calibrate CES production and utility functions when indirect taxation affecting inputs and consumption is present. These calibrated functions can then be used in computable general equilibrium models. Taxation modifies the standard calibration procedures since any taxed good has two associated prices and a choice of reference value units has to be made. We also provide an example...

We set up a two-period model, where individuals finance educational investment and first-period consumption by borrowing against risky second-period labor income. We show that the government should use both education subsidies and capital taxation to mitigate distortions, stemming from social insurance through labor taxation, and we derive a Ramsey-rule for the optimal combination of these inst...

Most people accept that structural and labour market reforms are needed in Europe. However few have been undertaken. The usual conjecture is that reforms are costly in economic performance and costly to finance. Blanchard and Giavazzi (2003) and Spector (2004) develop a general equilibrium model with imperfect competition to show the impact of labour or product market deregulation. We extend th...

Financial instability has increased for many economies in the face of greater capital mobility. Eliminating capital flows, especially portfolio investment flows, may reduce volatility, but it could also result in domestic capital constraints. To overcome this dilemma, policymakers may consider alternatives, such as progressive income taxation, that could raise domestic funds. In this paper, we ...

If tobacco advertising and promotion increase cigarette consumption, they are issues for public health policy. Although public health advocates assert that tobacco advertising does increase cigarette consumption, there is a significant empirical literature that finds little or no effect of tobacco advertising on smoking. In this chapter, these empirical studies are examined more closely with se...

Due to the use of distortionary taxation, many believe that real-world economies should attain a lower level of public expenditures than one might suspect from the analysis of arti cial models where lump-sum taxes are assumed to be available. The paper examines this popular hypothesis by means of the two-type self-selection model of income taxation. I provide su cient conditions for both a lowe...