This paper examines the dynamic implications of different preference formulations in open economy business cycle models with incomplete asset markets. In particular, we study two preference formulations: a time separable preference formulation with a fixed discount factor, and a time...

This paper studies an international tax policy design problem by employing a two-country dynamic general equilibrium model with incomplete asset markets. We investigate the possibility of welfareimproving active tax policies, in particular capital and labor income tax, under the non-cooperative...