This paper studies the quantitative implications of changes in the composition of taxes for long-run growth and welfare in the UK economy. Our results suggest that if the goal of tax policy is to promote long-run growth by altering relative tax rates in a budget neutral fashion, then it should...

This paper undertakes a normative investigation of the quantitative properties of optimal tax smoothing in a business cycle model with state contingent debt, capital-skill complementarity and endogenous skill acquisition under technology and public expenditure shocks. We find that skilled and...

This paper uses a micro-founded DSGE model to compare second-best optimal environmental policy, and the resulting Ramsey allocation, to first-best allocation. The focus is on the source and size of uncertainty, and how this affects optimal choices and the comparison between second- and...

This article studies the growth and welfare effects of public education spending in the USA for the post-war period. We calibrate a standard dynamic general equilibrium model, where human capital is the engine of long-run endogenous growth. Our results suggest that while increases in public...

Direct measurement of the social cost of rent seeking is impeded by non-observable and non-reported activities. We use a dynamic stochastic general equilibrium model to compute the social cost of rent seeking in Europe. Our estimate is based on competition among interest groups for privileges...