We provide a model for analyzing effects of the tax system and spending programs on the determination of government spending and taxpayer welfare and show that a tax system or spending program which is suboptimal from a Ramsey point of view can improve taxpayer welfare because the system creates...

Suppose the price of crude oil changes and you ask consumers what will happen to gasoline price. My unscientific survey suggests you will get very different answers about increases in crude oil prices than decreases. In the case of a crude increase a vast majority will predict a rapid increase...