Reforma Fiscal y Bienestar: El Caso de Chile

Welfare-maximizing fiscal structures are determined in a two-sector model of endogenous growth calibrated for the Chilean economy. Under the baseline, the current tax structure is found to be close to the optimal one. The result that the tax on physical cFiscal policy, endogenous growth, welfare

Equilibrium dynamics in the neoclassical growth model with habit formation and elastic labor supply

This note analyzes the equilibrium dynamics in the neoclassical growth model with habit-forming preferences and elastic labor supply. Habits enter into utility in a multiplicative way. The specification of the habit formation process comprises the particular cases of internal and external habits. Existence, uniqueness and saddle-path stability of the steady state are proved analytically.Ministerio de Ciencia e Innovación; ECO2011-2549

Fiscal policy, congestion, and endogenous growth

[Abstract]: We devise an endogenous growth model with private and public physical capital, and human capital, which allows for relative and absolute congestion. According to empirical evidence, long-run growth is invariant to fiscal policy. Despite its complexity, the dynamics of the market economy and the centralized economy are analyzed in detail. We show that an increase in absolute congestion reduces the long-run growth rate of output. In contrast, relative congestion does not affect long-run growth. In the absence of congestion, it is optimal to use lump-sum taxation, and with congestion it is optimal to also tax income.Spanish Ministry of Education and Science and FEDER; Grant SEJ2005-0090

Order in the Desert: Law Abiding Behavior at Burning Man

This article is divided into four sections. Section I offers a general description of Burning Man, including its organizers, social structure, and demographics. Section I also describes the Burning Man community and other features that distinguish Burning Man from other mass-gathering events. Section II describes the layers of internal and external social control found at Burning Man, and how they operate at the event. These layers of control include different forms of official law enforcement as well as the intra-community dispute resolution mechanisms employed by the Rangers. In Section III, the core of the article discusses the shortcomings of external deterrence mechanisms and the advantages of the intracommunity social control mechanisms that come from private ordering. Section III further compares Burning Man with other examples of private ordering, including carnivals. Section III concludes with a discussion of the factors that foster participant behavior and the social equilibrium of the Burning Man community. A conclusion is offered as Section IV

Equilibrium Efficiency in the Ramsey Model with Habit Formation

[Abstract]: This paper analyzes the equilibrium efficiency in a Ramsey model with habit formation. Uniqueness and saddle-path stability of the steady state is proved analytically. The competitive equilibrium is efficient at the steady state. However, the presence of externalities arising from average past consumption renders the competitive equilibrium inefficient off the steady state because agents do not take (fully) into account the indirect effect that consumption has in utility through its influence on habits. The efficient equilibrium can be decentralized by means of a consumption tax that converges to an arbitrary constant value, or by means of an income tax that converges to zero

Public Spending in a Model of Endogenous Growth with Habit Formation

[Abstract]: This paper introduces habit-forming preferences in a Barro-type endogenous growth model with productive public services. Government expenditure, which may be subject to congestion, is financed by distortionary income taxation. Different from the standard time-separable model, the presence of habits makes the economy feature transitional dynamics, which are solved in closed form. Setting the income tax so as to equate the elasticity of public services in production is shown to maximize both long-run growth and welfare as in the standard model. This second-best solution coincides with the first-best outcome only in the presence of proportional congestion.Financial support from the Spanish Ministry of Science and Innovation through Grant ECO2008-0418

Subsidy Policies in a Fertility Choice Model

[Abstract]: This paper compares the effects that a subsidy to health expenditure or a subsidy to childrearing costs has in a fertility choice model in which mortality is also endogenously determined. Whichever subsidy is instituted, the population growth rate rises. While a subsidy to health expenditure reduces welfare, a subsidy to child-rearing costs might increase welfare. The welfare analysis also suggests that a subsidy to health expenditure should be financed by a capital income tax, while a subsidy to child-rearing costs should be financed by a consumption tax

Utility and Production Externalities, Equilibrium Efficiency and Leisure Specification

[Abstract] This paper analyzes the implications that the specification of the leisure activity has on the equilibrium efficiency in a two-sector endogenous growth model with human capital accumulation. We consider external effects of consumption and leisure in utility, and sector-specific externalities associated to physical and human capital in production. The optimal tax policy to correct for the distortions caused by the externalities is characterized under all the typical leisure specifications considered in the literature: home production, quality time and raw time. We show that the optimal policy depends markedly on the leisure specification

Stages of Economic Development in an Innovation-Education Growth Model

[Abstract]: Physical capital accumulation, knowledge formation and R&D-based technological progress are considered the three main sources of growth. The common view is that they characterize, in a temporal order, the three phases that a typical advanced economy passes through in its development process. Recently it has been argued, however, that an innovation-education sequence could agree better than an education-innovation transition with the empirical fact that the rise in formal education to the masses follows rather than precedes the process of industrialization. Accordingly, this paper devises an endogenous growth model with physical capital, human capital and R&D that, unlike previous related work, is able to generate adjustment dynamics in which the innovative stage precedes knowledge formation, consistent with empirical evidence