Download or read book Consumption Heterogeneity in Macroeconomics and Public Finance written by Alan Kevin Olivi and published by . This book was released on 2019 with total page 206 pages. Available in PDF, EPUB and Kindle. Book excerpt: This thesis consists of three chapters on households' consumption. In the first chapter we study the canonical consumption-savings income-fluctuations problem with incomplete markets and show theoretically how to recover households' preferences and beliefs from their consumption and savings decisions. The main innovation is to show how to use the transitory component of income as an instrument that shifts current consumption without changing beliefs about future stochastic changes in consumption. As such, the transitory component of income, affects consumption growth through an intertemporal smoothing motive with no immediate effect on precautionary savings. With the precautionary motive neutralized, comparing changes in consumption and savings in response to temporary shocks allows us to identify the curvature of marginal utility: when savings respond more than consumption to transitory changes in income, the relative prudence is higher. Additionally, the transitory component makes it possible to identify an effective discount rate, which in turns makes it possible to control the degree of households' impatience. The curvature of marginal utility and the effective discount rate are sufficient to understand how preferences restrict consumption choices through the Euler equation. To then recover beliefs, we assume that beliefs are independent of exogenous changes in assets. This gives us an additional instrument to identify beliefs since the belief system then has to be consistent with the implied savings patterns as assets vary. These two instruments allows us to non parametrically recover preferences and beliefs in a very general framework: we can accommodate multiple consumption items (both durable and non-durable), multiple assets (liquid and illiquid, risky or not), habits, endogenous labor supply and so on. The second chapter builds on the first. We investigate empirically, in data from the PSID and the SIPP, how households' expectations deviate from rationality. Our estimation shows that households are overconfident and overoptimistic. The main source of overconfidence is that households underestimate the frequency of shocks and their optimism is driven by an underappreciation of negative shocks. However, these biases are not homogeneous in the population: they are amplified for lower income households while higher income households' perceptions are closer to rational expectations. These results explain not only the quantitative magnitude of undersaving and overreaction to income shocks, but also why higher income households accumulate disproportionately more wealth. We then explore how these beliefs affect the design of unemployment insurance and the transmission of countercyclical income risk to aggregate demand. In the third chapter, written with Xavier Jaravel, we investigate how to design optimal income redistribution policies when the price of goods is depends on the size of the corresponding markets and different households consume different goods. We introduce Increasing Returns to Scale (IRS) and heterogeneous spending patterns (non-homothetic preferences) into the canonical tax problem of Mirrlees. In this environment, any change in tax policy induces a change in labor supply, hence a change in market size, which translates endogenously into a change in productivity; this productivity response affects consumer prices and sets off another round of labor supply changes, market size changes, productivity changes, further labor supply changes, and so on. We show theoretically how to characterize these general equilibrium effects and we quantify their importance for the optimal tax schedule. The calibrated model matches empirical evidence on IRS as well as the tax schedule, earnings distribution and spending patterns observed in the United States. We establish three main results: (1) the optimal average tax rate is substantially lower on average, falling from about 45% under Constant Return to Scale (CRS) to about 35% with IRS (because IRS increase the efficiency cost of taxation); (2) with IRS and homothetic utility, optimal marginal tax rates are much less progressive than under CRS, and they become regressive above the 65th percentile of the income distribution (because IRS increase the efficiency cost of taxation relatively more for the rich); (3) with IRS and non-homothetic utility, optimal marginal tax rates become more progressive (intuitively, the planner internalizes that the productivity increase that could result from a tax break to the rich has low social value if the rich spend their marginal dollar on products that the poor do not consume much of). These findings indicate the importance of endogenous productivity and non-homotheticities for optimal taxation.
Download or read book The New Dynamic Public Finance written by Narayana R. Kocherlakota and published by Princeton University Press. This book was released on 2010-07-01 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt: Optimal tax design attempts to resolve a well-known trade-off: namely, that high taxes are bad insofar as they discourage people from working, but good to the degree that, by redistributing wealth, they help insure people against productivity shocks. Until recently, however, economic research on this question either ignored people's uncertainty about their future productivities or imposed strong and unrealistic functional form restrictions on taxes. In response to these problems, the new dynamic public finance was developed to study the design of optimal taxes given only minimal restrictions on the set of possible tax instruments, and on the nature of shocks affecting people in the economy. In this book, Narayana Kocherlakota surveys and discusses this exciting new approach to public finance. An important book for advanced PhD courses in public finance and macroeconomics, The New Dynamic Public Finance provides a formal connection between the problem of dynamic optimal taxation and dynamic principal-agent contracting theory. This connection means that the properties of solutions to principal-agent problems can be used to determine the properties of optimal tax systems. The book shows that such optimal tax systems necessarily involve asset income taxes, which may depend in sophisticated ways on current and past labor incomes. It also addresses the implications of this new approach for qualitative properties of optimal monetary policy, optimal government debt policy, and optimal bequest taxes. In addition, the book describes computational methods for approximate calculation of optimal taxes, and discusses possible paths for future research.
Download or read book Heterogeneous Spending Heterogeneous Multipliers written by Umberto Muratori and published by International Monetary Fund. This book was released on 2023-03-10 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Do local fiscal multipliers depend on what the government purchases? We find that government purchases of services have larger effects on employment than spending on goods. Industries producing services are more labor-intensive than industries producing goods. This heterogeneity in labor intensity is an important mechanism behind these results. Spending directed toward labor-intensive industries generates stronger increases in employment and labor income relative to spending toward non-labor-intensive industries.
Download or read book The Implications of Heterogeneity and Inequality for Asset Pricing written by Stavros Panageas and published by Now Publishers. This book was released on 2020-11-23 with total page 92 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Implications of Heterogeneity and Inequality for Asset Pricing provides a unified framework to better understand this large literature and to reconcile several of the seemingly inconsistent results found in some seminal papers.
Download or read book Handbook of Public Economics written by Alan J. Auerbach and published by Newnes. This book was released on 2013-06-24 with total page 497 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the Handbook of Public Economics, vol. 5, top scholars provide context and order to new research about mechanisms that underlie both public finance theories and applications. These fundamental subjects follow the recent, steady movement away from rational decision-making and toward more personalized approaches to tax generation and expenditure, especially in terms of the use of psychological methods and financial incentives. Closely scrutinized subjects include new research in empirical (instead of theoretical) public finance, the methods for measuring taxes (both in revenue generation and expenditure), and the roles that taxes play in specific settings, such as emerging economies, urban settings, charitable giving, and among political entities (cities, counties, states, countries). Contributors look at both the "tax" and "expenditure" sides of public finance, emphasizing recent influences that psychology and philosophy have exerted in economics with articles on behavioral finance, charitable giving, and dynamic taxation. To a field enjoying rapid growth, their articles bring context and order, illuminating the mechanisms that underlie both public finance theories and applications. - Editor Raj Chetty is the recipient of the 2013 John Bates Clark Medal from the American Economic Association - Focuses on new approaches to both revenue generation and expenditures in public finance - Presents coherent summaries of subjects in public economics that stretch from methodologies to applications - Makes details about public economics accessible to scholars in fields outside economics
Download or read book Consumption Heterogeneity written by Edmund Crawley and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Heterogeneity and Persistence in Returns to Wealth written by Andreas Fagereng and published by International Monetary Fund. This book was released on 2018-07-27 with total page 69 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide a systematic analysis of the properties of individual returns to wealth using twelve years of population data from Norway’s administrative tax records. We document a number of novel results. First, during our sample period individuals earn markedly different average returns on their financial assets (a standard deviation of 14%) and on their net worth (a standard deviation of 8%). Second, heterogeneity in returns does not arise merely from differences in the allocation of wealth between safe and risky assets: returns are heterogeneous even within asset classes. Third, returns are positively correlated with wealth: moving from the 10th to the 90th percentile of the financial wealth distribution increases the return by 3 percentage points - and by 17 percentage points when the same exercise is performed for the return to net worth. Fourth, wealth returns exhibit substantial persistence over time. We argue that while this persistence partly reflects stable differences in risk exposure and assets scale, it also reflects persistent heterogeneity in sophistication and financial information, as well as entrepreneurial talent. Finally, wealth returns are (mildly) correlated across generations. We discuss the implications of these findings for several strands of the wealth inequality debate.
Download or read book Consumption Inequality and Discount Rate Heterogeneity written by Gang Sun (Economics lecturer) and published by . This book was released on 2013 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Urban Public Finance written by D. Wildasin and published by Routledge. This book was released on 2013-09-05 with total page 193 pages. Available in PDF, EPUB and Kindle. Book excerpt: Considers such issues as the effect of local government policies on migration, the optimal size of cities, tax and expenditure capitalization, the economics of intergovernmental transfers, tax exporting and tax competition.
Download or read book Unequal We Stand written by Jonathan Heathcote and published by DIANE Publishing. This book was released on 2010-10 with total page 61 pages. Available in PDF, EPUB and Kindle. Book excerpt: The authors conducted a systematic empirical study of cross-sectional inequality in the U.S., integrating data from various surveys. The authors follow the mapping suggested by the household budget constraint from individual wages to individual earnings, to household earnings, to disposable income, and, ultimately, to consumption and wealth. They document a continuous and sizable increase in wage inequality over the sample period. Changes in the distribution of hours worked sharpen the rise in earnings inequality before 1982, but mitigate its increase thereafter. Taxes and transfers compress the level of income inequality, especially at the bottom of the distribution, but have little effect on the overall trend. Charts and tables. This is a print-on-demand publication; it is not an original.
Download or read book Policy and Choice written by William J. Congdon and published by Brookings Institution Press. This book was released on 2011 with total page 260 pages. Available in PDF, EPUB and Kindle. Book excerpt: Argues that public finance--the study of the government's role in economics--should incorporate principles from behavior economics and other branches of psychology.
Download or read book Government Finance Statistics Manual 2014 written by Mrs.Sage De Clerck and published by International Monetary Fund. This book was released on 2015-03-10 with total page 470 pages. Available in PDF, EPUB and Kindle. Book excerpt: The 2007–09 international financial crisis underscored the importance of reliable and timely statistics on the general government and public sectors. Government finance statistics are a basis for fiscal analysis and they play a vital role in developing and monitoring sound fiscal programs and in conducting surveillance of economic policies. The Government Finance Statistics Manual 2014 represents a major step forward in clarifying the standards for compiling and presenting fiscal statistics and strengthens the worldwide effort to improve public sector reporting and transparency.
Download or read book Handbook of Behavioral Economics Foundations and Applications 1 written by and published by Elsevier. This book was released on 2018-09-27 with total page 749 pages. Available in PDF, EPUB and Kindle. Book excerpt: Handbook of Behavioral Economics: Foundations and Applications presents the concepts and tools of behavioral economics. Its authors are all economists who share a belief that the objective of behavioral economics is to enrich, rather than to destroy or replace, standard economics. They provide authoritative perspectives on the value to economic inquiry of insights gained from psychology. Specific chapters in this first volume cover reference-dependent preferences, asset markets, household finance, corporate finance, public economics, industrial organization, and structural behavioural economics. This Handbook provides authoritative summaries by experts in respective subfields regarding where behavioral economics has been; what it has so far accomplished; and its promise for the future. This taking-stock is just what Behavioral Economics needs at this stage of its so-far successful career. - Helps academic and non-academic economists understand recent, rapid changes in theoretical and empirical advances within behavioral economics - Designed for economists already convinced of the benefits of behavioral economics and mainstream economists who feel threatened by new developments in behavioral economics - Written for those who wish to become quickly acquainted with behavioral economics
Download or read book Public Economics and the Household written by Patricia Apps and published by Cambridge University Press. This book was released on 2009-03-05 with total page 303 pages. Available in PDF, EPUB and Kindle. Book excerpt: Economic models in much of the public economics literature have been slow to reflect the significant changes towards double-income households throughout the developed world. This graduate-level text develops a more sophisticated approach to household economics, one that allows for multiple-income earners and shared decision-making. This approach is used to present a fundamentally new view of consumption. It then applies this to an analysis of tax systems, combining theoretical analysis of optimal taxation and tax reform with careful empirical study of the characteristics of income tax systems in four different countries: Australia, Germany, the UK and the USA. The book is particularly concerned with analysing, both theoretically and empirically, the impact of taxation on female labour supply, and identifying its effects on work incentives and fairness of income distribution. All this adds up to a fascinating new approach to the economics of household for researchers in both public and private sectors.
Download or read book Public Debt and Growth written by Jaejoon Woo and published by International Monetary Fund. This book was released on 2010-07-01 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the impact of high public debt on long-run economic growth. The analysis, based on a panel of advanced and emerging economies over almost four decades, takes into account a broad range of determinants of growth as well as various estimation issues including reverse causality and endogeneity. In addition, threshold effects, nonlinearities, and differences between advanced and emerging market economies are examined. The empirical results suggest an inverse relationship between initial debt and subsequent growth, controlling for other determinants of growth: on average, a 10 percentage point increase in the initial debt-to-GDP ratio is associated with a slowdown in annual real per capita GDP growth of around 0.2 percentage points per year, with the impact being somewhat smaller in advanced economies. There is some evidence of nonlinearity with higher levels of initial debt having a proportionately larger negative effect on subsequent growth. Analysis of the components of growth suggests that the adverse effect largely reflects a slowdown in labor productivity growth mainly due to reduced investment and slower growth of capital stock.
Download or read book Monetary Policy in the Euro Area written by Otmar Issing and published by Cambridge University Press. This book was released on 2001-07-26 with total page 220 pages. Available in PDF, EPUB and Kindle. Book excerpt: A non-technical analysis of the monetary policy strategy, institutions and operational procedures of the Eurosystem, first published in 2001.
Download or read book What Drives Private Saving Around the World written by Norman Loayza and published by World Bank Publications. This book was released on 2000 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: Saving rates vary considerably across countries and over time. Policies that spur development are an indirect but effective way to raise private saving rates, which rise with the level and growth rate of real per capita income.
