Capital Income Taxation Revisited: The Role of Information Asymmetry in the Credit Market

This paper reexamines the issue of optimal capital income taxation in an endogenous growth model with overlapping generations. By assuming costly state verification for capital producing projects, we show that the presence of the information asymmetry creates inefficiency in the credit market by driving a wedge between the rate of interest and the rate of transformation. In this context, we further show that capital income taxation worsens the credit market distortions and, subsequently, induces greater adverse effects on growth and welfare. Taken together, our analysis suggests that the presence of informational frictions in the credit market introduces a rationale for more conservative taxation on capital income from both growth and welfare perspectives.Capital income taxation; Asymmetric information; Economic growth

Gauge and Lorentz Covariant Quark Propagator in an Arbitrary Gluon Field

The quark propagator in presence of an arbitrary gluon field is calculated gauge and Lorentz covariantly order by order in terms of powers of gluon field and its derivatives. The result is independent of path connecting ends of propagator and leading order result coincides with the exact propagator in the trivial case of vanishing gluon field.Comment: 9 page