This paper derives novel formulas for the welfare gains of any tax reform around initial (optimal or suboptimal) dynamic tax systems. We use a perturbation-based method to express these formulas in terms of easily interpretable and empirically estimable parameters: elasticities of income and...

This paper studies the determinants of optimal taxes for wealthy individuals faced with capital income risk. I develop a model of optimal taxation of capital income in which wealth and income inequality is a result of capital income shocks together with frictions in financial markets. I use the...

We study the problem of optimal social insurance when agents are privately informed and the government cannot commit to a particular allocation. Contrary to the previous literature, we assume that agents' types have some persistence. We show that under some conditions it is optimal for the...