Income Inequality, Mobility, and the Welfare State: A Political Economy Model

In this paper, we set up a three-period stochastic overlapping generations model to analyze the implications of income inequality and mobility for demand for redistribution and social insurance. We model the size of two different public programs under the welfare state. We investigate bidimensional voting on the tax rates that determine the allocation of government revenues among transfer payments and old-age pensions. We show that the coalitions formed, the resulting political equilibria, and the demand for redistribution crucially depend on the level of income inequality and mobility.mobility, inequality, structure induced equilibrium, redistribution

Habits, Market Power, and Policy Selection

This paper examines monopolistic behavior in a framework with habit formation and consumer commitment. We show that time consistent output and pricing policies yield di®erent market outcomes. Policy selection determines the strategic properties of the producer's intra-personal game: current and future quantities are strategic com- plements, while current and future prices are strategic substitutes. In both a simple two-period model and an in¯nite-horizon model, we ¯nd that pricing policies allow the monopolist to attain higher equilibrium pro¯ts.Habit persistence, monopoly, time consistency

Deficit financing in overlapping generation economies with habit persistence

In this paper, we study how deficit financing is affected by the introduction of habit formation in an otherwise standard Gale (JET, 1973) economy in which the government is a net lender and young agents are borrowing rather than saving. We find that the amount of deficit the government is able to float into the economy is lower when habits are present. This finding is due to the fact that habit persistence puts a cap on borrowing.Deficit Financing.

Consequences of Modeling Habit Persistence

In this paper, we study the stationary and non-stationary equilibria of a deterministic, pure exchange, two-period overlapping generations model with habit persistence. We show that preferences with multiplicative habits can lead to quite different equilibrium outcomes compared to subtractive ones. The two most commonly adopted habit specifications can differ in terms of homotheticity, gross substitutability, and uniqueness of equilibria. We illustrate these differences in terms of steady state equilibria, as well as local dynamics.Multiplicative and subtractive habit persistence, multiple equilibria, equilibrium dynamics

Consequences of Modeling Habit Persistence

In this paper, we study the stationary and non-stationary equilibria of a de- terministic, pure exchange, two-period overlapping generations model with habit persistence. We show that preferences with multiplicative habits can lead to quite different equilibrium outcomes compared to subtractive ones. The two most commonly adopted habit specifications can differ in terms of homotheticity, gross substitutability, and uniqueness of equilibria. We illustrate these differences in terms of steady state equilibria, as well as local dynamics.Multiplicative and subtractive habit persistence, multiple equilibria, equilibrium dynamics

«We Are Alone»: Intergenerational Religious Transmission and the Effect of Migration in Italy

Although research shows a general decrease in religiosity in Western societies, religious transmission still seems to be a poorly studied phenomenon, especially in Italy. We do not know much about the dynamics of socialisation that take place in the family and the main factors that determine the success or failure of religious transmission from one generation to the next. Yet, the family context represents the first agency of socialisation to religion, from an early age, through experiences with parents, grandparents and relatives. On the other hand, in the age of religious diversification, the migration factor is becoming increasingly crucial for national religious landscapes. Nevertheless, religious transmission in foreign families and the impact of migration on family religiosity are still little studied. This contribution presents some research perspectives that have emerged from a wide-ranging survey, still in progress, on intergenerational transmission of religion in Catholic, Muslim and Orthodox families in Italy

Optimal Tax Rules for Addictive Consumption

This paper studies implementation of the social optimum in a model of habit formation. We consider taxes that address inefficiencies due to negative consumption externalities, imperfect competition, and self-control problems. Our contributions are to: i) account for producers’ market power; and ii) require implementation to be robust and time consistent. Together, these features can imply significantly lower taxes. We provide a general characterization of the optimal tax rule and illustrate it with two examples

Consequences of modeling habit persistence

In this paper, we study the stationary and non-stationary equilibria of a deterministic, pure exchange, two-period overlapping generations model with habit persistence. We show that preferences with multiplicative habits can lead to quite different equilibrium outcomes compared to subtractive ones. The two most commonly adopted habit specifications can differ in terms of homotheticity, gross substitutability, and uniqueness of equilibria. We illustrate these differences in terms of steady-state equilibria, as well as local dynamics