We identify a novel, fiscal hedging motive that helps to explain why governments issue more expensive, long-term debt. We analyze optimal fiscal policy in an economy with distortionary labor income taxes, nominal rigidities and nominal debt of various maturities. The government in our model can...

We use a firm-CEO assignment framework to model the market for CEO effective labor. In the model's equilibrium more talented CEOs match with and supply more effort to larger firms. Taxation of CEO incomes affects the equilibrium pricing of CEO effective labor and, hence, spills over and affects...

We bring together the theories of duality and dynamic programming. We show that the dual of a separable dynamic optimization problem can be recursively decomposed. We provide a dual version of the principle of optimality and give conditions under which the dual Bellman operator is a contraction...

This paper considers the credibility of social insurance arrangements in a dynamic moral hazard economy. A utilitarian planner selects an allocation for agents who experience privately observed taste shocks. When the planner can commit the optimal allocation exhibits an immiseration property:...

This paper considers the normative implications of technical change for tax policy design. A task-to-talent assignment model of the labor market is embedded into an optimal tax problem. The impacts of technical change on wage growth across talents and the substitutability of talents across tasks...

We bring together the theories of duality and dynamic programming. We show that the dual of a separable dynamic optimization problem can be recursively decomposed. We provide a dual version of the principle of optimality and give conditions under which the dual Bellman operator is a contraction...

A large positive literature emphasizes the role of technological change in driving the demand for skill and talent. We consider the normative implications of such technical change for policy design.