Revisiting Tax on Top Income
|
|
- Veronica Washington
- 5 years ago
- Views:
Transcription
1 Revisiting Tax on Top Income Ayşe İmhrohoğlu, Cagri Kumi and Arm Nakornthab, 2017 Presented by Johannes Fleck November 28, 2017
2 Structure of the paper (and today s presentation) 1. Research question 2. Model Main elements Agent s problem Sequential illustration Analytical description (quilibrium) Baseline calibration 3. Policy experiments (Maximize revenues) Maximize welfare Discussion 4. Conclusion Forward guidance: This is NOT a published paper (yet)
3 Research question
4 Research question What is the optimal marginal tax rate on top incomes? Literature displays strikingly large variation in answers Diamond and Saez [2011]: 73% Badel and Huggett [2015]: 49% Guner, Lopez-Daneri and Ventura [2016]: 42% Kindermann and Krueger [2017]: >90% This paper aims to contribute two related inquiries What answer emerges in a model with entrepreneurial activity? In this model is increasing overall or top progressivity more optimal?
5 Model
6 Model: main elements 1. Demographics: simplified life-cycle with intergenerational altruism young and old cohorts, aging is stochastic when old dies, offspring receives bequest and re-enters as young each household has only one offspring measure of all agents normalized to 1 2. Preferences: u(c t, 1 l t ) = c1 σ 1 t 1 σ 1 + χ (1 lt)1 σ 2 1 σ 2 3. Technology: competitive corporate and entrepreneurial sectors each period stochastic work and entrepreneurial ability (yt, θ t) after shock agents decide to be (corporate) worker or entrepreneur work income: y t MPL of F (Kt c, Lc t ) = A(K t c)α (L c t ( )1 α entrepreneurial income: f (k t, n t) = θ t k γ t (lt + nt)1 γ) ν (l: own labor; n: hired labor; k: own and borrowed capital) 4. Market incompleteness: risk free assets, borrowing constraints individual risk is uninsurable
7 Model: main elements 5. Government: closes the model (does not optimize!) xpenditures: consume g, pay pension p, service debt (1 + rt)d t Revenues: Dt+1, linear consumption tax τt c, income tax T t given by { (1 λyt τ )Y t + τt bal Y t + τt k r ta t if Y t < Y H T t(y t) = (1 λy τ H )Y H + τ bal t Y H + τ k t r ta t + τ H (Y t Y H ) if Y t > Y H Y H : top 1% income threshold, τt bal : linear state and local gov t tax 6. ffects of changing the tax code? Policy experiments I to IV: Objective τ (Overall progressivity) τ H (Marginal rate top 1% ) Maximize Revenue I II Maximize Welfare III IV
8 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young Agent enters the economy with Old asset endowment a0 work (corporate) productivity y0 entrepreneurial productivity θ0
9 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young Agent decides to work as (corporate) Worker or ntrepreneur Old
10 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young Old At the start of every period each agent draws productivities (y t, θ t ) They are independent and governed by π(y t+1 y t ) and π(θ t+1 θ t ) After observing, agent decides to work as Worker or ntrepreneur
11 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young The decision problem remains the same each period Old
12 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young With exogenous probability 1 π y agent gets hit by an age shock Old
13 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young In the period following the age shock Old a Worker becomes Retiree an ntrepreneur may continue as ntrepreneur or become Retiree
14 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young The decision problems of R and remain the same in every period Old
15 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young Old
16 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young With exogenous probability 1 π 0 agents get hit by a death shock Old
17 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young In the period after the death shock, R and re-enter the economy Their initial endowments are a0: given by parental choice of a t+1 y0: computed using invariant distribution of y t θ0: conditional on parent s θ t but following same Markov process ("This reflects the fact that the offspring inherits her parent s business") Old
18 Model: agent s problem W W W R R R A! AG! DATH! DI! SHOCK Ω Young Old Completes illustration of all individual decisions
19 Model: young agent problem { } V Y (a t, y t, θ t ) = max Vt Y,W (a t, y t, θ t ), Vt Y, (a t, y t, θ t )
20 Model: young worker problem { Vt Y,W (a t, y t, θ t ) = max u(c t, 1 l t ) + βπ y t [Vt+1(a Y t+1, y t+1, θ t+1 )] c t,l t,a t+1 } + β(1 π y )V O,R t+1 (a t+1) s.t. 0 l t 1 0 a t+1 (1 + τ c t )c t + a t+1 = w t l t y t + (1 + r t )a t T t (Y W t ) Y W t = w t l t y t + r t a t
21 Model: young entrepreneur problem { Vt Y, (a t, y t, θ t ) = max u(c t, 1 l t ) + βπ y t [Vt+1(a Y t+1, y t+1, θ t+1 )] c t,l t,k t,n t,a t+1 } + β(1 π y ) t [Vt+1(a O t+1, θ t+1 )] s.t. 0 l t 1 0 a t+1 0 n t (1 + τ c t )c t + a t+1 = Y t Y t 0 k t (1 + d)a t + a t T t (Y t ) = θ t ( k γ t (l t + n t ) 1 γ) ν δkt r t (k t a t ) w t n t
22 Model: old agent problem { } V O (a t, θ t ) = max Vt O,R (a t ), Vt O, (a t, θ t ) Recall: This is NOT the problem of a retiree but of an old agent who was an entrepreneur in the period before aging or who currently is an (old) entrepreneur
23 Model: old retiree problem s.t. { Vt O,R (a t ) = max u(c t, 1) + βπ O V O,R c t+1 (a t+1) t,a t+1 0 a t+1 (1 + τ c t )c t + a t+1 = (1 + r t )a t + p T t (Y O t ) Y O t = r t a t + p + β(1 π O ) t [V Y t+1(a t+1, y t+1, θ t+1 )] }
24 Model: old entrepreneur problem { Vt O, (a t, θ t ) = max u(c t, 1 l t ) + βπ O t [Vt+1(a O t+1, θ t+1 )] c t,l t,k t,n t,a t+1 } + β(1 π O ) t [Vt+1(a Y t+1, y t+1, θ t+1 )] s.t. 0 l t 1 0 a t+1 0 n t (1 + τ c t )c t + a t+1 = Y t Y t 0 k t (1 + d)a t + a t T t (Y t ) = θ t ( k γ t (l t + n t ) 1 γ) ν δkt r t (k t a t ) w t n t
25 Model: Competitive equilibrium in stationary steady state Some notation and model specific features States and distributions agent s state vector st = (a t, y t, θ t, ξ t) where ξ t {YW, Y, O, R} entire state space is given by S = R+ Y Θ Ξ transition matrix Γt(s t, s t+1) given by optimal policies and exogenous processes π(y t+1 y t) and π(θ t+1 θ t) agent distribution Φ t+1 = Γ t(s t, s t+1) Φ t In stationary steady state Φt = Φ Dt = D
26 Model: Competitive quilibrium A C is a set of value functions, agent policies, factor inputs and prices, government debt and taxes such that given r, w, tax function T ( ), tax rates τ c, τ bal, τ k and pensions p allocations ct, a t, l t, k t, n t max agent s problem s t S rt = MPK C δ = MPK δ wt = MPL C = MPL capital markets clear: kt(s t)dφ t(s t) + K c t + D t = a t(s t)dφ t(s t) labor market clears: nt(s t)dφ t(s t) + L c t = l t(s t)dφ t(s t) government budget holds: [Tt(Y s ) + τ c t c t(s t)]dφ t(s t) + D t = g t + p π R + (1 + r t)d t resource constraint holds: g+ c t(s t)dφ t(s t)+ a t+1(s t)dφ t(s t)=f (K c t, L c t )+ f (k t, n t)dφ t(s t) Φ associated with saving policy, π(yt+1 y t) and π(θ t+1 θ t) is Φ government debt is constant (at D )
27 assets. The degree of decreasing returns to scale,, is set to 0.88 as in Bassetto Model: baseline - fixed parameters The entrepreneurial capital share,,is chosen to equal Table 1: Fixed Parameters Parameter Value Preferences, technology, and demographics Risk aversion Inverse of Frisch elasticity Capital share 0.33 Technology A 1 Probability of staying young y Probability of staying old o Depreciation 0.06 ntr. return to scale 0.88 ntr. borrowing constraint d 0.5 Labor income process and social security payments Autocorrelation ndowments Pension/average annual income p 40% Parameter values come from various papers Public purchases, government debt, and taxes In order to generate income and wealth distributions and the share of entrepren Fraction of government spending to output g top 1% of income realistically, we introduce highly productive workers and highl Fraction of government debt to total capital D 0.27 entrepreneurs to the model. In every period, a worker is endowed with one uni Consumption tax c 5% xcept: Age and death shock probabilities so that average working and retirement periods are 45 and 11 years (80% young in eq.) Capital tax k 7.4% Technology A 1 Probability of staying young y Probability of staying old o Depreciation 0.06 ntr. return to scale 0.88 ntr. borrowing constraint d 0.5 Labor income process and social security payments Autocorrelation Pension/average annual income p 40% Public purchases, government debt, and taxes Fraction of government spending to output g Fraction of government debt to total capital D 0.27 Consumption tax c 5% Capital tax k 7.4% State and local tax bal 5% Revenue requirement Tax progressivity State and local tax bal 5% 13 Revenue requirement Tax progressivity ts nerate income and wealth distributions and the share of entrepreneurs at the ome realistically, we introduce highly productive workers and highly successful
28 Table 2 summarizes the parameters calibrated to match the seventeen targets in the data that are presented the next section. Model: baseline - calibrated parameters Table 2: Calibrated Parameters Calibrated parameter Value Discount factor ntrepreneurial ability { 0, 1, 2} {0, 1.8, 2.75} ntr. transition probabilities see eq. 33 ntr. capital share 0.45 Disutility from working 1.9 Standard deviation of productivity shock y 0.18 Value of highest productivity y Probability of having highest productivity Probability of staying highest productivity Superstars Features of andthe transitions Benchmark to match conomy empirical earnings and savings work ability: [ ] In this section, we discuss the aggregate and distributional properties of the benchmark economy. In top order transitions: to conduct meaningful policy experiments regarding changes in the progressivity and π(ythe 6 ytop 6 C ) tax = rate, 0.002, we π(y need 6 y to 6) make = 0.931; sure that the model delivers realistic income π(y 3 C y 6) = 0, π(y 3 y 6) = entrepreneurial ability: [ ] top transitions: π(θ 2 θ 0) = 0, π(θ 2 θ 1) = , π(θ 2 θ 2) =
29 Table 4 summarizes the key macroeconomic aggregates in the benchmark economy. In data. Model: baseline - targets Table 3: Target Moments Targets Data Model Capital to output ratio %ntrepreneurs %xitingentrepreneurs %Workerstoentrepreneurs %Hiringentrepreneurs %Averageworkedhours Income distribution Income Gini ntr. income Gini Worker earnings Gini % income % income %entr.intop1% Wealth distribution Wealth Gini % wealth % wealth %Peopleatzerowealth Ratio of median net worth entr. to workers
30 Overall our model matches income and wealth distributions quite well. Table 6: Wealth Distribution in the Benchmark conomy Table 4: Macroeconomic Share of wealth (in Aggregates %) Wealth Variable quintiles Value Top 0-20% 20-40% 40-60% Capital 60-80% % 90-95% 289.5% 95-99% % Gini Data Government 9.9 debt % Model Consumption % Investment 17.4% Table 7 shows the distribution Government of income consumption taxes paid in the 3.5% data and the model generated Average hours worked 33% distribution. 11 The distribution of tax payments is more concentrated than the income Interest rate 0.27% distribution but is less concentrated than the wealth distribution. In the data, first and Tax revenues second income quantiles are responsible - Consumption for 2.5% tax of income 4.0% tax payments. In the model this equal to 4.6%. Also in the data, -Labortax fifth income quantile is responsible 8.9% for 74.6% of income tax payments. The corresponding value -Proportionalcapitaltax in the model is 77.5%. 7.9% The concentration in income tax payments is the natural consequence Pensionof system the concentration in income and wealth distribution. -Totalpensionpayment 11.8% Model: baseline - macro and taxes Table 7: Share of Tax Payments in the Benchmark conomy Tables 5 and 6 summarize the model-generated income Share ofand tax wealth (in %) distributions together with their counterparts in the data. 9 The Income standard quintiles life-cycle models often fail to generate 0-20% 20-40% 40-60% 60-80% % income and wealth distributions correctly at the upper end. 10 Our model with workers and Data entrepreneurs is able Model to generate 1.2 a 3.4 realistic6.6 wealth 11.4 and income 77.5distribution.
31 Policy xperiments
32 P I and II: maximize revenue Idea of policy experiments: Fix λ at baseline value and search for optimal τ or τ H I Change overall progressivity τ = % revenues (relative to baseline) P I - full results II Change top progressivity τ H P II - full results = % revenues (relative to baseline)
33 P III and IV: maximize welfare Figure 3: Welfare Maximizing (welfare computed in consumption equivalent terms) To delve deeper into the reasons behind the welfare results, in Table 16, we display the income III Change and wealthoverall distributions progressivity in the three(lhs) economies considered: the benchmark economy, the economy τ = where 0.15welfare +4.25% is maximized CV (relative by changing to baseline) the overall progressivity P III - full resultsof taxes (t = 0.15), and the economy where the welfare-maximizing marginal income tax rate for the IV Change top progressivity (rhs) top 1% is found to be equal to 55%. While the income distribution is not very different across these τh three = 0.55 economies, +0.72% the wealth CV distribution (relative todisplays baseline) P IV - full results important differences. While the Wealth Gini in the benchmark economy is 0.84, the second economy where the overall
34 falls by 38.6%. Average consumption by the richest 1% young workers decrease by 2 elfare gains we observe. Although young and old entrepreneurs are Hours affected worked quite declines for most groups, except for those on the top 1% of incomes. ly, their small share in the population reduces their impact on the Variance overallof welfare consumption declines for all except the old workers. P III and IV - more details Table 13: Consumption and Hours - Welfare Maximizing Progressivity Panel A Average consumption Average hours worked xperiment =0.15 YW Y OW O YW Y O whole economy top 1% N/A bottom 99% % % N/A % 79.3 N/A 92.9 N/A 89.8 N/A N/A Panel B Variance consumption Variance hours worked YW Y OW O YW Y O whole economy bottom 99% Table 15: Consumption and Hours - Welfare-Maximizing Tax at the Top Panel A Average consumption Average hours worked xperiment H =0.55 YW Y OW O YW Y O whole economy top 1% N/A bottom 99% % % N/A N/A N/A 0-33% 89.2 N/A N/A 99.0 N/A N/A Panel B Variance consumption Variance hours worked YW Y OW O YW Y O whole economy bottom 99% Comparison of the Two Tax xperiments Our results indicate that the optimal tax rate that targets the richest 1% of the popu generates a moderate welfare gain (CV increases by 0.72%) compared to the expe Authors: welfare 28 changes driven by changes in income and wealth where the overall progressivity is increased (CV increases by 4.25%). Figure 3 summ the welfare results from these experiments. Panel A displays the welfare gain/loss income distribution not very different across these three economies increase the progressivity of taxes by varying. Panel B,summarizes changes in wel we increase the tax rate that applies to the top 1% of income levels. wealth distribution displays important differences: wealth share of the top 10% decreases and the wealth share of most of the lower quantiles increases in the overall progressivity case 30
35 P III and IV - more details: income and wealth Table 16: Changes in Wealth and Income Distribution - Welfare Maximizing Benchmark =0.15 H=0.55 Wealth distribution Wealth quintiles 0-20% % % % % Top 10% % % Wealth Gini Income distribution (all) Income quintiles 0-20% % % % % Top 10% % % Income Gini
36 P III and IV - more details: taxes Table 17: Share of Tax Payments and Tax Rates - Welfare Maximizing Percentiles of income Benchmark =0.15 H =0.55 Average tax rate Top 10% Top 5% Top 1% Marginal tax rate Top 10% Top 5% Top 1% Share of tax payments Income quintiles 0-20% % % % %
37 Conclusion
38 Conclusion 1. The paper explores a policy question but motivation is scarce 2. Some assumptions would benefit from additional details (robustness) endogenous borrowing constraint for entrepreneurs own and hired labor perfect substitutes for entrepreneurs stochastic aging induces additional precautionary savings 3. Thorough analytical characterization of model absent 4. Assessment of tax reforms is entirely numerical... variance of agent s after-tax income? cost of insurance via labor and asset market? elaboration on elasticities? (labor and capital supply, activity) comparison of results to papers such as KK 2017 hardly adequate
39 Thanks for your attention
40 P I: results Table 8: Changes in Progressivity-Revenue Maximizing Progressivity =0.035 =0.05 =0.07 =0.09 =0.10 =0.12 =0.15 Output Labor supply Capital Revenues Federal income tax State and local taxes Corporate income tax All taxes Additional targets Interest rate Worker avg. hours worked ntr. avg. hours worked Labor supply in corp sector Labor supply in entr. sector Capital in corp sector Capital in entr. sector %entr. in overall economy We find that revenues from the federal income tax schedule is maximizedreturn when = 0.10 and tax revenues from all sources are maximized when =0.09. Both values are
41 P II: results Table 9: Changes in Tax for Top 1% - Revenue Maximizing Marginal tax for top 1% H =0.2 H =0.4 H =0.55 H =0.6 H =0.8 Output Labor supply Capital Revenues Federal income tax State and local taxes Corporate income tax All taxes Additional targets Interest rate Worker avg. hours worked ntr. avg. hours worked Labor supply in corp sector Labor supply in entr. sector Capital in corp sector Capital in entr. sector %entr. in overall economy Table 10 summarizes the average and marginal income tax rates and share ofreturn tax payments for various income quantiles for three economies: 1) the benchmark, 2) the economy
42 revenue by 3.2% and the total tax revenue by 5.8%. P III: results Table 12: Changes in Progressivity - Welfare Maximizing Progressivity Output Labor supply Capital Revenues Federal income tax State and local taxes Corporate income tax All taxes Local tax rate, bal Average CV CV (All) CV (Work) CV (ntr.) Additional targets Interest rate Worker avg. hours worked ntr. avg. hours worked Labor supply in corp sector Labor supply in entr. sector Capital in corp sector Capital in entr. sector %entr. in overall economy = = = = = = = Table 13, explores the forces behind the welfare gains despite the fact that there are return large drops in economic aggregates. In our model, there are four distinct groups: young workers (YW), young entrepreneurs (Y), old workers (OW), and old entrepreneurs (O).
43 of taxes. This fact also contributes to the smaller welfare gains found in this case. P IV: resultstable 14: Changes in Tax for Top 1% - Welfare Maximizing Marginal tax for top 1% H =0 H=0.2 H=0.4 H=0.55 H=0.7 H=0.8 Output Labor supply Capital Revenues Federal income tax State and local taxes Corporate income tax All tax Local tax rate, bal Average CV All Workers ntr Additional targets Worker avg. hours worked ntr. avg. hours worked Labor supply in corp sector Labor supply in entr. sector Capital in corp sector Capital in entr. sector %entr.inoveralleconomy return
Financing National Health Insurance and Challenge of Fast Population Aging: The Case of Taiwan
Financing National Health Insurance and Challenge of Fast Population Aging: The Case of Taiwan Minchung Hsu Pei-Ju Liao GRIPS Academia Sinica October 15, 2010 Abstract This paper aims to discover the impacts
More informationAtkeson, Chari and Kehoe (1999), Taxing Capital Income: A Bad Idea, QR Fed Mpls
Lucas (1990), Supply Side Economics: an Analytical Review, Oxford Economic Papers When I left graduate school, in 1963, I believed that the single most desirable change in the U.S. structure would be the
More informationThe Macroeconomics of Universal Health Insurance Vouchers
The Macroeconomics of Universal Health Insurance Vouchers Juergen Jung Towson University Chung Tran University of New South Wales Jul-Aug 2009 Jung and Tran (TU and UNSW) Health Vouchers 2009 1 / 29 Dysfunctional
More information. Social Security Actuarial Balance in General Equilibrium. S. İmrohoroğlu (USC) and S. Nishiyama (CBO)
....... Social Security Actuarial Balance in General Equilibrium S. İmrohoroğlu (USC) and S. Nishiyama (CBO) Rapid Aging and Chinese Pension Reform, June 3, 2014 SHUFE, Shanghai ..... The results in this
More informationSang-Wook (Stanley) Cho
Beggar-thy-parents? A Lifecycle Model of Intergenerational Altruism Sang-Wook (Stanley) Cho University of New South Wales March 2009 Motivation & Question Since Becker (1974), several studies analyzing
More informationNot All Oil Price Shocks Are Alike: A Neoclassical Perspective
Not All Oil Price Shocks Are Alike: A Neoclassical Perspective Vipin Arora Pedro Gomis-Porqueras Junsang Lee U.S. EIA Deakin Univ. SKKU December 16, 2013 GRIPS Junsang Lee (SKKU) Oil Price Dynamics in
More informationConvergence of Life Expectancy and Living Standards in the World
Convergence of Life Expectancy and Living Standards in the World Kenichi Ueda* *The University of Tokyo PRI-ADBI Joint Workshop January 13, 2017 The views are those of the author and should not be attributed
More informationSang-Wook (Stanley) Cho
Beggar-thy-parents? A Lifecycle Model of Intergenerational Altruism Sang-Wook (Stanley) Cho University of New South Wales, Sydney July 2009, CEF Conference Motivation & Question Since Becker (1974), several
More informationDoes the Social Safety Net Improve Welfare? A Dynamic General Equilibrium Analysis
Does the Social Safety Net Improve Welfare? A Dynamic General Equilibrium Analysis University of Western Ontario February 2013 Question Main Question: what is the welfare cost/gain of US social safety
More informationHigher Taxes at the Top: The Role of Entrepreneurs
Higher Taxes at the Top: The Role of Entrepreneurs Bettina Brüggemann Goethe University Frankfurt January 26, 2016 COMMENTS ARE WELCOME Abstract This paper contributes to the recent and growing literature
More informationHeterogeneous Firm, Financial Market Integration and International Risk Sharing
Heterogeneous Firm, Financial Market Integration and International Risk Sharing Ming-Jen Chang, Shikuan Chen and Yen-Chen Wu National DongHwa University Thursday 22 nd November 2018 Department of Economics,
More informationDesigning the Optimal Social Security Pension System
Designing the Optimal Social Security Pension System Shinichi Nishiyama Department of Risk Management and Insurance Georgia State University November 17, 2008 Abstract We extend a standard overlapping-generations
More informationECON 4325 Monetary Policy and Business Fluctuations
ECON 4325 Monetary Policy and Business Fluctuations Tommy Sveen Norges Bank January 28, 2009 TS (NB) ECON 4325 January 28, 2009 / 35 Introduction A simple model of a classical monetary economy. Perfect
More informationThe Risky Steady State and the Interest Rate Lower Bound
The Risky Steady State and the Interest Rate Lower Bound Timothy Hills Taisuke Nakata Sebastian Schmidt New York University Federal Reserve Board European Central Bank 1 September 2016 1 The views expressed
More informationAchieving Actuarial Balance in Social Security: Measuring the Welfare Effects on Individuals
Achieving Actuarial Balance in Social Security: Measuring the Welfare Effects on Individuals Selahattin İmrohoroğlu 1 Shinichi Nishiyama 2 1 University of Southern California (selo@marshall.usc.edu) 2
More informationHigher Taxes at the Top: The Role of Entrepreneurs
Higher Taxes at the Top: The Role of Entrepreneurs Bettina Brüggemann * McMaster University November 20, 2017 Abstract This paper computes optimal top marginal tax rates in Bewley-Aiyagari type economies
More informationEntrepreneurship, Frictions and Wealth
Entrepreneurship, Frictions and Wealth Marco Cagetti University of Virginia 1 Mariacristina De Nardi Federal Reserve Bank of Chicago, NBER, and University of Minnesota Previous work: Potential and existing
More informationHousehold income risk, nominal frictions, and incomplete markets 1
Household income risk, nominal frictions, and incomplete markets 1 2013 North American Summer Meeting Ralph Lütticke 13.06.2013 1 Joint-work with Christian Bayer, Lien Pham, and Volker Tjaden 1 / 30 Research
More informationBalance Sheet Recessions
Balance Sheet Recessions Zhen Huo and José-Víctor Ríos-Rull University of Minnesota Federal Reserve Bank of Minneapolis CAERP CEPR NBER Conference on Money Credit and Financial Frictions Huo & Ríos-Rull
More informationSlides III - Complete Markets
Slides III - Complete Markets Julio Garín University of Georgia Macroeconomic Theory II (Ph.D.) Spring 2017 Macroeconomic Theory II Slides III - Complete Markets Spring 2017 1 / 33 Outline 1. Risk, Uncertainty,
More informationHealth Care Reform or Labor Market Reform? A Quantitative Analysis of the Affordable Care Act
Health Care Reform or Labor Market Reform? A Quantitative Analysis of the Affordable Care Act Makoto Nakajima 1 Didem Tüzemen 2 1 Federal Reserve Bank of Philadelphia 2 Federal Reserve Bank of Kansas City
More informationAsset Pricing and Equity Premium Puzzle. E. Young Lecture Notes Chapter 13
Asset Pricing and Equity Premium Puzzle 1 E. Young Lecture Notes Chapter 13 1 A Lucas Tree Model Consider a pure exchange, representative household economy. Suppose there exists an asset called a tree.
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Comprehensive Examination: Macroeconomics Fall, 2016
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Fall, 2016 Section 1. (Suggested Time: 45 Minutes) For 3 of the following 6 statements, state
More informationUninsured Unemployment Risk and Optimal Monetary Policy
Uninsured Unemployment Risk and Optimal Monetary Policy Edouard Challe CREST & Ecole Polytechnique ASSA 2018 Strong precautionary motive Low consumption Bad aggregate shock High unemployment Low output
More informationOptimal Taxation Under Capital-Skill Complementarity
Optimal Taxation Under Capital-Skill Complementarity Ctirad Slavík, CERGE-EI, Prague (with Hakki Yazici, Sabanci University and Özlem Kina, EUI) January 4, 2019 ASSA in Atlanta 1 / 31 Motivation Optimal
More informationWealth inequality, family background, and estate taxation
Wealth inequality, family background, and estate taxation Mariacristina De Nardi 1 Fang Yang 2 1 UCL, Federal Reserve Bank of Chicago, IFS, and NBER 2 Louisiana State University June 8, 2015 De Nardi and
More informationHousehold Saving, Financial Constraints, and the Current Account Balance in China
Household Saving, Financial Constraints, and the Current Account Balance in China Ayşe İmrohoroğlu USC Marshall Kai Zhao Univ. of Connecticut Facing Demographic Change in a Challenging Economic Environment-
More informationComprehensive Exam. August 19, 2013
Comprehensive Exam August 19, 2013 You have a total of 180 minutes to complete the exam. If a question seems ambiguous, state why, sharpen it up and answer the sharpened-up question. Good luck! 1 1 Menu
More informationHousehold Heterogeneity in Macroeconomics
Household Heterogeneity in Macroeconomics Department of Economics HKUST August 7, 2018 Household Heterogeneity in Macroeconomics 1 / 48 Reference Krueger, Dirk, Kurt Mitman, and Fabrizio Perri. Macroeconomics
More informationState Dependency of Monetary Policy: The Refinancing Channel
State Dependency of Monetary Policy: The Refinancing Channel Martin Eichenbaum, Sergio Rebelo, and Arlene Wong May 2018 Motivation In the US, bulk of household borrowing is in fixed rate mortgages with
More informationCredit Crises, Precautionary Savings and the Liquidity Trap October (R&R Quarterly 31, 2016Journal 1 / of19
Credit Crises, Precautionary Savings and the Liquidity Trap (R&R Quarterly Journal of nomics) October 31, 2016 Credit Crises, Precautionary Savings and the Liquidity Trap October (R&R Quarterly 31, 2016Journal
More informationA simple wealth model
Quantitative Macroeconomics Raül Santaeulàlia-Llopis, MOVE-UAB and Barcelona GSE Homework 5, due Thu Nov 1 I A simple wealth model Consider the sequential problem of a household that maximizes over streams
More informationWealth Accumulation in the US: Do Inheritances and Bequests Play a Significant Role
Wealth Accumulation in the US: Do Inheritances and Bequests Play a Significant Role John Laitner January 26, 2015 The author gratefully acknowledges support from the U.S. Social Security Administration
More informationUnderstanding the Distributional Impact of Long-Run Inflation. August 2011
Understanding the Distributional Impact of Long-Run Inflation Gabriele Camera Purdue University YiLi Chien Purdue University August 2011 BROAD VIEW Study impact of macroeconomic policy in heterogeneous-agent
More informationHigh Marginal Tax Rates on the Top 1%?
High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk June 27, 218 Fabian Kindermann University of Bonn and Netspar Dirk Krueger University of Pennsylvania,
More informationAging, Social Security Reform and Factor Price in a Transition Economy
Aging, Social Security Reform and Factor Price in a Transition Economy Tomoaki Yamada Rissho University 2, December 2007 Motivation Objectives Introduction: Motivation Rapid aging of the population combined
More informationReforming the Social Security Earnings Cap: The Role of Endogenous Human Capital
Reforming the Social Security Earnings Cap: The Role of Endogenous Human Capital Adam Blandin Arizona State University May 20, 2016 Motivation Social Security payroll tax capped at $118, 500 Policy makers
More informationHealth Insurance Reform: The impact of a Medicare Buy-In
1/ 46 Motivation Life-Cycle Model Calibration Quantitative Analysis Health Insurance Reform: The impact of a Medicare Buy-In Gary Hansen (UCLA) Minchung Hsu (GRIPS) Junsang Lee (KDI) October 7, 2011 Macro-Labor
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Comprehensive Examination: Macroeconomics Fall, 2010
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Fall, 2010 Section 1. (Suggested Time: 45 Minutes) For 3 of the following 6 statements, state
More informationA Macroeconomic Model with Financial Panics
A Macroeconomic Model with Financial Panics Mark Gertler, Nobuhiro Kiyotaki, Andrea Prestipino NYU, Princeton, Federal Reserve Board 1 March 218 1 The views expressed in this paper are those of the authors
More informationHome Production and Social Security Reform
Home Production and Social Security Reform Michael Dotsey Wenli Li Fang Yang Federal Reserve Bank of Philadelphia SUNY-Albany October 17, 2012 Dotsey, Li, Yang () Home Production October 17, 2012 1 / 29
More informationMenu Costs and Phillips Curve by Mikhail Golosov and Robert Lucas. JPE (2007)
Menu Costs and Phillips Curve by Mikhail Golosov and Robert Lucas. JPE (2007) Virginia Olivella and Jose Ignacio Lopez October 2008 Motivation Menu costs and repricing decisions Micro foundation of sticky
More informationOil Price Uncertainty in a Small Open Economy
Yusuf Soner Başkaya Timur Hülagü Hande Küçük 6 April 212 Oil price volatility is high and it varies over time... 15 1 5 1985 199 1995 2 25 21 (a) Mean.4.35.3.25.2.15.1.5 1985 199 1995 2 25 21 (b) Coefficient
More informationThe Effects of Financing Rules in Pay-As-You-Go Pension Systems on the Life and the Business Cycle
The Effects of Financing Rules in Pay-As-You-Go Pension Systems on the Life and the Business Cycle Christian Scharrer a a University of Augsburg, Department of Economics, Universitätsstrasse 6, 8659 Augsburg,
More informationDistortionary Fiscal Policy and Monetary Policy Goals
Distortionary Fiscal Policy and Monetary Policy Goals Klaus Adam and Roberto M. Billi Sveriges Riksbank Working Paper Series No. xxx October 213 Abstract We reconsider the role of an inflation conservative
More informationCapital Income Tax Reform and the Japanese Economy (Very Preliminary and Incomplete)
Capital Income Tax Reform and the Japanese Economy (Very Preliminary and Incomplete) Gary Hansen (UCLA), Selo İmrohoroğlu (USC), Nao Sudo (BoJ) December 22, 2015 Keio University December 22, 2015 Keio
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Preliminary Examination: Macroeconomics Spring, 2007
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Preliminary Examination: Macroeconomics Spring, 2007 Instructions: Read the questions carefully and make sure to show your work. You
More informationA Small Open Economy DSGE Model for an Oil Exporting Emerging Economy
A Small Open Economy DSGE Model for an Oil Exporting Emerging Economy Iklaga, Fred Ogli University of Surrey f.iklaga@surrey.ac.uk Presented at the 33rd USAEE/IAEE North American Conference, October 25-28,
More informationOn the Welfare and Distributional Implications of. Intermediation Costs
On the Welfare and Distributional Implications of Intermediation Costs Antnio Antunes Tiago Cavalcanti Anne Villamil November 2, 2006 Abstract This paper studies the distributional implications of intermediation
More informationUnemployment Fluctuations and Nominal GDP Targeting
Unemployment Fluctuations and Nominal GDP Targeting Roberto M. Billi Sveriges Riksbank 3 January 219 Abstract I evaluate the welfare performance of a target for the level of nominal GDP in the context
More informationSecondary Capital Markets and the Potential Non-monotonicity between Finance and Economic Development
Secondary Capital Markets and the Potential Non-monotonicity between Finance and Economic Development Burak R Uras Tilburg University European Banking Center Midwest Economic Theory Conference Uras (Tilburg)
More informationMacroeconomics Qualifying Examination
Macroeconomics Qualifying Examination January 211 Department of Economics UNC Chapel Hill Instructions: This examination consists of three questions. Answer all questions. Answering only two questions
More informationA Model with Costly-State Verification
A Model with Costly-State Verification Jesús Fernández-Villaverde University of Pennsylvania December 19, 2012 Jesús Fernández-Villaverde (PENN) Costly-State December 19, 2012 1 / 47 A Model with Costly-State
More informationHigh Marginal Tax Rates on the Top 1%?
High Marginal Tax Rates on the Top 1%? Lessons from a Life Cycle Model with Idiosyncratic Income Risk Fabian Kindermann University of Bonn and Netspar Dirk Krueger University of Pennsylvania, CEPR, CFS,
More informationMacroeconomics 2. Lecture 12 - Idiosyncratic Risk and Incomplete Markets Equilibrium April. Sciences Po
Macroeconomics 2 Lecture 12 - Idiosyncratic Risk and Incomplete Markets Equilibrium Zsófia L. Bárány Sciences Po 2014 April Last week two benchmarks: autarky and complete markets non-state contingent bonds:
More informationIntergenerational transfers, tax policies and public debt
Intergenerational transfers, tax policies and public debt Erwan MOUSSAULT February 13, 2017 Abstract This paper studies the impact of the tax system on intergenerational family transfers in an overlapping
More information14.05 Lecture Notes. Endogenous Growth
14.05 Lecture Notes Endogenous Growth George-Marios Angeletos MIT Department of Economics April 3, 2013 1 George-Marios Angeletos 1 The Simple AK Model In this section we consider the simplest version
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Comprehensive Examination: Macroeconomics Spring, 2016
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Spring, 2016 Section 1. Suggested Time: 45 Minutes) For 3 of the following 6 statements,
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Preliminary Examination: Macroeconomics Fall, 2009
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Preliminary Examination: Macroeconomics Fall, 2009 Instructions: Read the questions carefully and make sure to show your work. You
More informationInvestment-Specific Technological Change, Taxation and Inequality in the U.S.
Investment-Specific Technological Change, Taxation and Inequality in the U.S. Pedro Brinca 1 João B. Duarte 2 João G. Oliveira 2 ASSA Annual Meeting January 2019 1 Nova SBE and Center for Economics and
More informationBusiness Cycles and Household Formation: The Micro versus the Macro Labor Elasticity
Business Cycles and Household Formation: The Micro versus the Macro Labor Elasticity Greg Kaplan José-Víctor Ríos-Rull University of Pennsylvania University of Minnesota, Mpls Fed, and CAERP EFACR Consumption
More informationPublic Investment, Debt, and Welfare: A Quantitative Analysis
Public Investment, Debt, and Welfare: A Quantitative Analysis Santanu Chatterjee University of Georgia Felix Rioja Georgia State University October 31, 2017 John Gibson Georgia State University Abstract
More informationNBER WORKING PAPER SERIES HIGH MARGINAL TAX RATES ON THE TOP 1%? LESSONS FROM A LIFE CYCLE MODEL WITH IDIOSYNCRATIC INCOME RISK
NBER WORKING PAPER SERIES HIGH MARGINAL TAX RATES ON THE TOP 1%? LESSONS FROM A LIFE CYCLE MODEL WITH IDIOSYNCRATIC INCOME RISK Fabian Kindermann Dirk Krueger Working Paper 261 http://www.nber.org/papers/w261
More informationRetirement Financing: An Optimal Reform Approach. QSPS Summer Workshop 2016 May 19-21
Retirement Financing: An Optimal Reform Approach Roozbeh Hosseini University of Georgia Ali Shourideh Wharton School QSPS Summer Workshop 2016 May 19-21 Roozbeh Hosseini(UGA) 0 of 34 Background and Motivation
More informationThe Budgetary and Welfare Effects of. Tax-Deferred Retirement Saving Accounts
The Budgetary and Welfare Effects of Tax-Deferred Retirement Saving Accounts Shinichi Nishiyama Department of Risk Management and Insurance Georgia State University March 22, 2010 Abstract We extend a
More informationTaxing Firms Facing Financial Frictions
Taxing Firms Facing Financial Frictions Daniel Wills 1 Gustavo Camilo 2 1 Universidad de los Andes 2 Cornerstone November 11, 2017 NTA 2017 Conference Corporate income is often taxed at different sources
More informationReserve Accumulation, Macroeconomic Stabilization and Sovereign Risk
Reserve Accumulation, Macroeconomic Stabilization and Sovereign Risk Javier Bianchi 1 César Sosa-Padilla 2 2018 SED Annual Meeting 1 Minneapolis Fed & NBER 2 University of Notre Dame Motivation EMEs with
More informationAging and Pension Reform in a Two-Region World: The Role of Human Capital
Aging and Pension Reform in a Two-Region World: The Role of Human Capital University of Mannheim, University of Cologne, Munich Center for the Economics of Aging 13th Annual Joint Conference of the RRC
More informationHabit Formation in State-Dependent Pricing Models: Implications for the Dynamics of Output and Prices
Habit Formation in State-Dependent Pricing Models: Implications for the Dynamics of Output and Prices Phuong V. Ngo,a a Department of Economics, Cleveland State University, 22 Euclid Avenue, Cleveland,
More informationA Model of Financial Intermediation
A Model of Financial Intermediation Jesús Fernández-Villaverde University of Pennsylvania December 25, 2012 Jesús Fernández-Villaverde (PENN) A Model of Financial Intermediation December 25, 2012 1 / 43
More informationOn the Welfare and Distributional Implications of. Intermediation Costs
On the Welfare and Distributional Implications of Intermediation Costs Tiago V. de V. Cavalcanti Anne P. Villamil July 14, 2005 Abstract This paper studies the distributional implications of intermediation
More informationMonetary Economics Final Exam
316-466 Monetary Economics Final Exam 1. Flexible-price monetary economics (90 marks). Consider a stochastic flexibleprice money in the utility function model. Time is discrete and denoted t =0, 1,...
More informationHealth insurance and entrepreneurship
Health insurance and entrepreneurship Raquel Fonseca Université du Québec à Montréal, CIRANO and RAND Vincenzo Quadrini University of Southern California February 11, 2015 VERY PRELIMINARY AND INCOMPLETE.
More information1 Dynamic programming
1 Dynamic programming A country has just discovered a natural resource which yields an income per period R measured in terms of traded goods. The cost of exploitation is negligible. The government wants
More informationChapter 5 Macroeconomics and Finance
Macro II Chapter 5 Macro and Finance 1 Chapter 5 Macroeconomics and Finance Main references : - L. Ljundqvist and T. Sargent, Chapter 7 - Mehra and Prescott 1985 JME paper - Jerman 1998 JME paper - J.
More informationAccounting for Patterns of Wealth Inequality
. 1 Accounting for Patterns of Wealth Inequality Lutz Hendricks Iowa State University, CESifo, CFS March 28, 2004. 1 Introduction 2 Wealth is highly concentrated in U.S. data: The richest 1% of households
More informationFiscal Reform and Government Debt in Japan: A Neoclassical Perspective
Fiscal Reform and Government Debt in Japan: A Neoclassical Perspective Gary D. Hansen and Selahattin İmrohoroğlu April 3, 212 Abstract Past government spending in Japan is currently imposing a significant
More informationWhy are real interest rates so low? Secular stagnation and the relative price of capital goods
The facts Why are real interest rates so low? Secular stagnation and the relative price of capital goods Bank of England and LSE June 2015 The facts This does not reflect the views of the Bank of England
More informationLife Cycle Responses to Health Insurance Status
Life Cycle Responses to Health Insurance Status Florian Pelgrin 1, and Pascal St-Amour,3 1 EDHEC Business School University of Lausanne, Faculty of Business and Economics (HEC Lausanne) 3 Swiss Finance
More informationInterest rate policies, banking and the macro-economy
Interest rate policies, banking and the macro-economy Vincenzo Quadrini University of Southern California and CEPR November 10, 2017 VERY PRELIMINARY AND INCOMPLETE Abstract Low interest rates may stimulate
More informationOptimal Public Debt with Life Cycle Motives
Optimal Public Debt with Life Cycle Motives William Peterman Federal Reserve Board Erick Sager Bureau of Labor Statistics QSPS May 20, 2016 **The views herein are the authors and not necessarily those
More informationDebt Constraints and the Labor Wedge
Debt Constraints and the Labor Wedge By Patrick Kehoe, Virgiliu Midrigan, and Elena Pastorino This paper is motivated by the strong correlation between changes in household debt and employment across regions
More informationInfrastructure and the Optimal Level of Public Debt
Infrastructure and the Optimal Level of Public Debt Santanu Chatterjee University of Georgia Felix Rioja Georgia State University February 29, 2016 John Gibson Georgia State University Abstract We examine
More informationSTATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics. Ph. D. Comprehensive Examination: Macroeconomics Spring, 2009
STATE UNIVERSITY OF NEW YORK AT ALBANY Department of Economics Ph. D. Comprehensive Examination: Macroeconomics Spring, 2009 Section 1. (Suggested Time: 45 Minutes) For 3 of the following 6 statements,
More informationSDP Macroeconomics Final exam, 2014 Professor Ricardo Reis
SDP Macroeconomics Final exam, 2014 Professor Ricardo Reis Answer each question in three or four sentences and perhaps one equation or graph. Remember that the explanation determines the grade. 1. Question
More informationOn the Merits of Conventional vs Unconventional Fiscal Policy
On the Merits of Conventional vs Unconventional Fiscal Policy Matthieu Lemoine and Jesper Lindé Banque de France and Sveriges Riksbank The views expressed in this paper do not necessarily reflect those
More informationProbably Too Little, Certainly Too Late. An Assessment of the Juncker Investment Plan
Probably Too Little, Certainly Too Late. An Assessment of the Juncker Investment Plan Mathilde Le Moigne 1 Francesco Saraceno 2,3 Sébastien Villemot 2 1 École Normale Supérieure 2 OFCE Sciences Po 3 LUISS-SEP
More informationAsset Pricing in Production Economies
Urban J. Jermann 1998 Presented By: Farhang Farazmand October 16, 2007 Motivation Can we try to explain the asset pricing puzzles and the macroeconomic business cycles, in one framework. Motivation: Equity
More informationKeynesian Views On The Fiscal Multiplier
Faculty of Social Sciences Jeppe Druedahl (Ph.d. Student) Department of Economics 16th of December 2013 Slide 1/29 Outline 1 2 3 4 5 16th of December 2013 Slide 2/29 The For Today 1 Some 2 A Benchmark
More informationEndogenous employment and incomplete markets
Endogenous employment and incomplete markets Andres Zambrano Universidad de los Andes June 2, 2014 Motivation Self-insurance models with incomplete markets generate negatively skewed wealth distributions
More informationOptimal Redistribution in an Open Economy
Optimal Redistribution in an Open Economy Oleg Itskhoki Harvard University Princeton University January 8, 2008 1 / 29 How should society respond to increasing inequality? 2 / 29 How should society respond
More informationWhy are Banks Exposed to Monetary Policy?
Why are Banks Exposed to Monetary Policy? Sebastian Di Tella and Pablo Kurlat Stanford University Bank of Portugal, June 2017 Banks are exposed to monetary policy shocks Assets Loans (long term) Liabilities
More information1 Explaining Labor Market Volatility
Christiano Economics 416 Advanced Macroeconomics Take home midterm exam. 1 Explaining Labor Market Volatility The purpose of this question is to explore a labor market puzzle that has bedeviled business
More informationThe Tail that Wags the Economy: Belief-driven Business Cycles and Persistent Stagnation
The Tail that Wags the Economy: Belief-driven Business Cycles and Persistent Stagnation Julian Kozlowski Laura Veldkamp Venky Venkateswaran NYU NYU Stern NYU Stern June 215 1 / 27 Introduction The Great
More informationHousehold Finance in China
Household Finance in China Russell Cooper 1 and Guozhong Zhu 2 October 22, 2016 1 Department of Economics, the Pennsylvania State University and NBER, russellcoop@gmail.com 2 School of Business, University
More informationImplementing an Agent-Based General Equilibrium Model
Implementing an Agent-Based General Equilibrium Model 1 2 3 Pure Exchange General Equilibrium We shall take N dividend processes δ n (t) as exogenous with a distribution which is known to all agents There
More informationDebt Covenants and the Macroeconomy: The Interest Coverage Channel
Debt Covenants and the Macroeconomy: The Interest Coverage Channel Daniel L. Greenwald MIT Sloan EFA Lunch, April 19 Daniel L. Greenwald Debt Covenants and the Macroeconomy EFA Lunch, April 19 1 / 6 Introduction
More informationNew Business Start-ups and the Business Cycle
New Business Start-ups and the Business Cycle Ali Moghaddasi Kelishomi (Joint with Melvyn Coles, University of Essex) The 22nd Annual Conference on Monetary and Exchange Rate Policies Banking Supervision
More informationDebt Burdens and the Interest Rate Response to Fiscal Stimulus: Theory and Cross-Country Evidence.
Debt Burdens and the Interest Rate Response to Fiscal Stimulus: Theory and Cross-Country Evidence. Jorge Miranda-Pinto 1, Daniel Murphy 2, Kieran Walsh 2, Eric Young 1 1 UVA, 2 UVA Darden School of Business
More informationMicrofoundations of DSGE Models: III Lecture
Microfoundations of DSGE Models: III Lecture Barbara Annicchiarico BBLM del Dipartimento del Tesoro 2 Giugno 2. Annicchiarico (Università di Tor Vergata) (Institute) Microfoundations of DSGE Models 2 Giugno
More information