We analyze optimal capital and labor taxes in a model where (i) the government makes noncontingent announcements about future policies and (ii) ex-post state-contingent deviations from these announcements are costly. With Full Commitment, optimal fiscal announcements are unbiased forecasts of...

We consider models where the Ramsey-optimal fiscal policy under Full Commitment (FC) is time-inconsistent and define a new notion of optimal policy, Limited-Time Commitment (LTC). Successive one-period lived governments can commit to future plans over a finite horizon. We provide a sufficient...

We propose a theory of optimal fiscal policy consistent with the observation that governments typically inherit their predecessors' plans and formulate their policies over a finite future horizon. We use this framework, which we call “Limited-Time Commitment" (LTC), to make two contributions....

We analyze optimal capital and labor taxes in a model where (i) the government makes noncontingent announcements about future policies and (ii) ex-post statecontingent deviations from these announcements are costly. With Full Commitment, optimal fiscal announcements are unbiased forecasts of...

We characterize the dispersion of firm-level productivity and demand shocks over the business cycle using Swedish microdata including prices and analyse the consequences for firms and the aggregate economy. Demand dispersion increases by more than productivity dispersion in recessions....

Using worker-level panel data we document that current wealth predicts the probability that a worker transitions from employment to non-employment. We find a surprising Ushaped pattern: Low-wealth workers face higher probability than the median worker, but so do the high-wealth workers. This...