The capital income tax cuts that were part of the Jobs and Growth Tax Relief Reconciliation Act of 2003 are expiring this year and the administration has to decide whether to extend them or not. This paper assesses the effects of these tax cuts in a calibrated dynamic general equilibrium...

This paper studies a model of corporate finance in which firms use stock issuance to finance investment. Since the firm recognizes the relationship between future dividends and stock prices, future variables enter in the constraints and optimal policy is in general time inconsistent. We discuss...

This paper studies a production economy with aggregate uncertainty where consumers have limited commitment on their financial liabilities. Markets are endogenously incomplete due to the fact that the borrowing constraints are determined endogenously. We first show that, if competitive financial...

Two general forms of standard licensing policies are considered for a non-drastic cost-reducing innovation: (a) combination of an upfront fee and uniform linear royalty, and (b) combination of auction and uniform linear royalty. It is shown that in an oligopoly, the total reduction in the cost...

We consider a Cournot Oligopoly market of firms possessing increasing returns to scale technologies. It is shown that an external regulating agency can increase total social welfare without running a deficit. It offers to subsidize one firm an amount which depends on the output level of that...

This paper studies a model of corporate finance in which firms use stock issuance to finance investment. We assume that the firm is "rational" and therefore recognizes the relationship between future dividends and stock prices. Under this assumption, future variables enter in the constraints of...

Social optimization problems typically maximize the sum of individual weighted utilities over feasible allocations that satisfy certain constraints. While social optimization problems are at the heart of economic analysis, it is not always clear how to choose individual welfare weights. In this...