We quantify the connection between inequality and business cycles in a medium-scale New Keynesian model with tractable household heterogeneity, estimated with aggregate and cross-sectional data. We find that inequality substantially amplifies cyclical fluctuations. The primary source of this...

This paper characterizes the optimal taxation of top earners in a world with externalities. It takes a reduced-form approach that spans a broad class of models where top earners create externalities on the economy. The model allows for a flexible relationship between top earnings and the...

How does forced displacement shape development in origin countries? We examine the case of Venezuela, where over seven million people have been forcibly displaced. Our study compares municipalities with different proportions of foreign-born populations before and after the international oil...

We propose a novel channel through which rising income inequality affects job creation and macroeconomic outcomes. High-income households save relatively more in stocks and bonds but less in bank deposits. A rising top income share thereby increases the relative financing cost for bank-dependent...

Approximately $76 billion in out-of-pocket medical spending was deducted as an itemized medical deduction (IMD) in 2021, resulting in about $9 billion in federal forgone tax revenue. We use data from U.S. tax returns to examine how these tax savings are distributed across income and age, how the...