In this article we explore the proposition that, in economies with imperfect competitive markets, the optimal capital income tax is negative and the optimal tax on firms' profits is confiscatory. We show that if the total factor productivity as well as the number of firms or varieties are...

This paper analyzes the welfare effects of altruism on the optimal fiscal policy. The existence of positive bequests links present and future generations in the economy. We show that these altruistic links provide a new role for indirect taxation (consumption and estate taxes) with important...

We analyze the relationship between economic growth and fiscal policy in an overlapping generations economy with joy-of-giving altruism, where endogenous growth is driven by the accumulation of human capital through formal schooling. The government finances public expenditure through labor...

The purpose of this paper is to analyse the impact of the unions' bargaining power on production and wages. In our model a competitive final good is produced from two substitutable intermediate goods. One of them is produced in a unionized unskilled sector and the other in a unionized skilled...

After the collapse of housing markets during the Great Depression, the U.S. government played a large role in shaping the future of housing finance and policy. Soon thereafter, housing markets witnessed the largest boom in recent history. The objective in this paper is to quantify the...

Mortgage loans are a striking example of a persistent nominal rigidity. As a result, under incomplete markets, monetary policy affects decisions through the cost of new mortgage borrowing and the value of payments on outstanding debt. Observed debt levels and payment to income ratios suggest the...