We study efficient allocations and optimal policies in a life-cycle economy with risky human capital accumulation. The agents are ex-ante heterogeneous in their initial human capital and in their ability level. Ex-post, they also differ in their realization of shocks to human capital. The model...

The Nelder-Mead simplex method is an optimization routine that works well with irregular objective functions. For a function of <InlineEquation ID="IEq1"> <EquationSource Format="TEX">$$n$$</EquationSource> </InlineEquation> parameters, it compares the objective function at the <InlineEquation ID="IEq2"> <EquationSource Format="TEX">$$n+1$$</EquationSource> </InlineEquation> vertices of a simplex and updates the worst vertex through simplex search steps. However, a...</equationsource></inlineequation></equationsource></inlineequation>

Property crime is today more widespread in Europe than in the United States, while the opposite was true during the 1970s and 1980s. In this paper we study the determinants of crime in a dynamic general equilibrium model with uninsured idiosyncratic shocks. We focus on Germany, and compute the...

In this paper we quantitatively investigate the implications of a model of consumption risk sharing where infinitely-lived households are subject to exogenous idiosyncratic shocks to their earnings, and where the realization of these shocks are private information. Our theoretical contribution...

This paper characterizes the dynamics of Pareto efficient income taxes in a dynamic economy with human capital accumulation. I extend the tools and insights developed by Mirrlees (1971) into a dynamic framework. I follow Diamond (1998) by assuming that there are no income effects on labor...

We analyze optimal income taxes and optimal schooling subsidies in a dynamic private information economy with observable human capital accumulation. We show that under plausible conditions the marginal schooling subsidies are positive and that they are zero at both endpoints of the skill...

In this paper I study dynamic optimal taxation in a private information economy with continuum of individual productivity shocks that are persistent over time. I formulate the problem recursively and use first order approach to simplify it. I provide full justification of the first order...

This paper characterizes optimal income taxes in a dynamic economy where human capital is unobservable and the government is restricted to use taxes that depend only on current income. I show that unobservability of human capital tends to decrease the labor wedge, while the effect on the human...

We calibrate the model to the U.S. economy in order to quantify these policies and evaluate their impact in the transition and in the steady state. We find that, when the optimal schooling policies are implemented jointly with the optimal income taxes then they are negligible and their effect is...