The theorem of the zero taxation of capital income is reexamined and is shown to hinge critically on the assupmtions of a long horizon and perfect markets for the inter-temporal allocation of resources: (i) with additive preferences, and for any permanent tax rate, a reduction of this rate for a...

A canonical model of Bayesian learning is presented in which the interaction of the observation of discrete activities and the possibility of delaying actions generate informational externalities with generic properties: (i) strategic complementarities or substituabilities arise, depending on...