Explaining Taxes at the Upper Tail of the Income Distribution: The Role of Utility Interdependence

Optimal tax theory has difficulty rationalizing high marginal tax rates at the upper end of the income distribution. In this paper, I construct a model of optimal income taxation in which agents' preferences are interdependent. I derive a simple expression for optimal taxes that accommodates consumption externalities within Mirrlees (1971) framework. Using this expression, I conduct a positive analysis of taxation: assuming that observed taxes are optimal, I derive analytic expressions for i) a parameter that measures the degree of agents' utility interdependence and ii) a function that quantifies the consumption externality agents of different income impose to society. Using these expressions, I rationalize income taxes in the United States and the United Kingdom for the 1995-2004 period. I show that only a moderate amount of utility interdependence is su±cient for this. My estimations indicate that the progressivity of tax schedules may be driven by corrective considerations.optimal non-linear taxation, relative consumption, utility interdependence, rationalization.

In the quest of macroprudential policy tools

The global financial crisis of late 2008 could not have provided more convincing evidence that price stability is not a sufficient condition for financial stability. In order to attain both, central banks must develop macroprudential instruments in order to prevent the occurrence of systemic risk episodes. For this reason testing the effectiveness of different macroprudential tools and their interaction with monetary policy is crucial. In this paper we explore whether two policy instruments, namely, a capital adequacy ratio (CAR) rule in combination with a Taylor rule may provide a better macroeconomic outcome than a Taylor rule alone. We conduct our analysis by appending a macroeconometric financial block to an otherwise standard semistructural small open economy neokeynesian model for policy analysis estimated for the Mexican economy. Our results show that with the inclusion of the second policy instrument the central bank can obtain substantial gains. Moreover, we find that when the CAR rule is adequately designed the central authority can mitigate output gap shocks of twice the variance than the Taylor rule alone scenario. Thus, under this two rule case the central authority can isolate financial shocks and dampen their effects over macroeconomic variables.macroprudential tools; macroprudential policy; capital adequacy ratio; Taylor rule

Distributed Linear Precoding and User Selection in Coordinated Multicell Systems

In this manuscript we tackle the problem of semi-distributed user selection with distributed linear precoding for sum rate maximization in multiuser multicell systems. A set of adjacent base stations (BS) form a cluster in order to perform coordinated transmission to cell-edge users, and coordination is carried out through a central processing unit (CU). However, the message exchange between BSs and the CU is limited to scheduling control signaling and no user data or channel state information (CSI) exchange is allowed. In the considered multicell coordinated approach, each BS has its own set of cell-edge users and transmits only to one intended user while interference to non-intended users at other BSs is suppressed by signal steering (precoding). We use two distributed linear precoding schemes, Distributed Zero Forcing (DZF) and Distributed Virtual Signal-to-Interference-plus-Noise Ratio (DVSINR). Considering multiple users per cell and the backhaul limitations, the BSs rely on local CSI to solve the user selection problem. First we investigate how the signal-to-noise-ratio (SNR) regime and the number of antennas at the BSs affect the effective channel gain (the magnitude of the channels after precoding) and its relationship with multiuser diversity. Considering that user selection must be based on the type of implemented precoding, we develop metrics of compatibility (estimations of the effective channel gains) that can be computed from local CSI at each BS and reported to the CU for scheduling decisions. Based on such metrics, we design user selection algorithms that can find a set of users that potentially maximizes the sum rate. Numerical results show the effectiveness of the proposed metrics and algorithms for different configurations of users and antennas at the base stations.Comment: 12 pages, 6 figure

A Space-Time Correlation Model for MRC Receivers in Rayleigh Fading Channels

This paper presents a statistical model for maximum ratio combining (MRC) receivers in Rayleigh fading channels enabled with a temporal combining process. This means that the receiver effectively combines spatial and temporal branch components. Therefore, the signals that will be processed by the MRC receiver are collected not only across different antennas (space), \mbox{but also} at different instants of time. This suggests the use of a retransmission, repetition or space-time coding algorithm that forces the receiver to store signals in memory at different instants of time. Eventually, these stored signals are combined after a predefined or dynamically optimized number of time-slots or retransmissions. The model includes temporal correlation features in addition to the space correlation between the signals of the different components or branches of the MRC receiver. The derivation uses a frequency domain approach (using the characteristic function of the random variables) to obtain closed-form expressions of the statistics of the post-processing signal-to-noise ratio (SNR) under the assumption of equivalent correlation in time and equivalent correlation in space. The described methodology paves the way for the reformulation of other statistical functions as a frequency-domain polynomial root analysis problem. This is opposed to the infinite series approach that is used in the conventional methodology using directly the probability density function (PDF). The results suggest that temporal diversity is a good complement to receivers with limited spatial diversity capabilities. It is also shown that this additional operation could be maximized when the temporal diversity is adaptive (i.e., activated by thresholds of SNR), thus leading to a better resource utilization.info:eu-repo/semantics/publishedVersio

Joint design of RFID reader and tag anti-collision algorithms: a cross-layer approach

This paper investigates the potential interactions between reader and tag anti-collision algorithms of passive RFID (radio frequency identification) systems. Conventionally, reader and tag anti-collision algorithms are designed by assuming that they are independent from each other. In practice, however, readers and tags usually operate in the same frequency band. Therefore, contention between their transmissions can also potentially arise. Furthermore, reader anti-collision policies directly influence the way in which tags are activated, and thus also the way in which they collide when responding to reader’s requests. In view of this and considering the growing numbers of readers and tags, independence of both schemes can not longer be considered as a realistic assumption. This paper partially fills this gap by proposing a new cross-layer framework for the joint evaluation and optimization of reader and tag anticollision algorithms. Furthermore, the paper proposes a new approach, based on a Markov model, which allows capacity and stability analysis of asymmetrical RFID systems (i.e., when readers and tags experience different channel and queuing states). The model captures the dynamics of tag activation and tag detection processes of RFID. It also represents a first step towards a joint design of physical (PHY) and medium access control layers (MAC) of RFID. The results indicate that the proposed approach provides benefits in terms of stability and capacity over conventional solutions even when readers and tags operate in different channels. The results also provide useful guidelines towards the cross-layer design of future RFID platforms

To Rebate or Not to Rebate: Fuel Economy Standards vs. Feebates?

We compare the welfare effects in equilibrium of two environmental regulations that aim at increasing the new cars fleet’s average fuel efficiency: the fuel economy standards and the feebate policies. Maintaining the same environmental benefit and tax revenue, we simulate the implementation of each policy in France and the United States. Standard-type policies have larger negative welfare effects, up to 3.2 times those from the feebate. Effects on manufacturers are heterogeneous: some are better of under the standard regulation. The addition of a market to trade levels of fuel efficiency dominates the simple standard regulation but not always the feebate. We also consider the attribute-based standard, technological improvements, and the equivalence with fuel taxes as extensions

(Mis)allocation of Renewable Energy Sources

Policies to incentivize the adoption of renewable energy sources (RES) usually offer little flexibility to adapt to the varying benefits of those sources at different locations within the same jurisdiction. In this paper, we propose a general framework to evaluate the geographical misallocation of RES that is potentially caused by the uniform nature of feed-in-tariffs (FiT). After estimating the dispersion of the marginal benefits from solar production in Germany, we compute the social and private costs from the current configuration of residential solar photovoltaic (PV) plants relative to a reallocation scenario in which regions with a higher PV average productivity are given higher amounts of solar capacity, while keeping the system's total capacity fixed. We find that a 20% solar installation rate and with a conservative value for the social cost of carbon, the total value of solar PV would increase by about 5% relative to the current allocation. In addition, we estimate the size of the transmission capacity between the North and the South of Germany implied by the differences in marginal costs across those regions. Reallocating solar capacity with the possibility of exporting surpluses from the South to the North would yield gains that range from 14 to 22% depending on the rate of solar penetration. A benefit-cost analysis shows that additional transmission can be beneficial if there is sufficient RES capacity reallocated across regions

Stability properties of network diversity multiple access with multiple-antenna reception and imperfect collision multiplicity estimation

In NDMA (network diversity multiple access), protocol-controlled retransmissions are used to create a virtual MIMO (multiple-input multiple-output) system, where collisions can be resolved via source separation. By using this retransmission diversity approach for collision resolution, NDMA is the family of random access protocols with the highest potential throughput. However, several issues remain open today in the modeling and design of this type of protocol, particularly in terms of dynamic stable performance and backlog delay. This paper attempts to partially fill this gap by proposing a Markov model for the study of the dynamic-stable performance of a symmetrical and non-blind NDMA protocol assisted by a multiple-antenna receiver. The model is useful in the study of stability aspects in terms of the backlog-user distribution and average backlog delay. It also allows for the investigation of the different states of the system and the transition probabilities between them. Unlike previous works, the proposed approach considers the imperfect estimation of the collision multiplicity, which is a crucial process to the performance of NDMA. The results suggest that NDMA improves not only the throughput performance over previous solutions, but also the average number of backlogged users, the average backlog delay and, in general, the stability of random access protocols. It is also shown that when multiuser detection conditions degrade, ALOHA-type backlog retransmission becomes relevant to the stable operation of NDMA