updated as a function of the labor income and the previous balance.

We analytically and quantitatively examine a prominent justifi…cation for capital income taxation: goods preferred by those with high ability ought to be taxed. We study an environment where commodity taxes are allowed to be nonlinear functions of income and consumption and …find that, when...

intertemporal distortions.

taxes on family size.

We describe a novel channel through which credit frictions driven by adverse selection problems cause financial shocks to lead to fluctuations in real activity. When firms have private information about their default risk, firms with high probability of default have stronger incentives to run up...

This paper studies an environment in which information aggregation interacts with investment decisions. The first contribution of the paper is to develop a tractable model of such interactions. The second contribution is to solve the model in closed form and derive a series of implications that...