WORKING PAPERS
'Capital Deaccumulation and the Large Persistent Effects of Financial Crises.' Job Market Paper. (abstract)
Presented at the 2015 MMF Research Group, Fall 2015 Midwest Macro Meeting.
WORKS IN PROGRESS
'Entrepreneurship, Agency Frictions and Redistributive Capital Taxation', with Corina Boar.
Many models of optimal capital taxation, such as Chamley (1986), imply that governments would optimally confiscate all capital at the beginning of time, unless this is exogenously ruled out. This runs counter to conventional economic wisdom, which suggests that firms will be managed less efficiently if all capital is owned by the state. We model this efficiency cost of confiscating capital, considering optimal Ramsey capital taxation in a setting with workers, who live hand-to-mouth, and entrepreneurs, who manage firms and face a moral hazard problem due to their investment being unobservable. Entrepreneurs fund investment through optimal contracts with risk-neutral banks. We first consider a two-period problem where the social planner has the power to confiscate any amount of entrepreneurial capital at the beginning of the first period. The social planner optimally chooses to confiscate some entrepreneurial capital in order to redistribute wealth from entrepreneurs to workers. However the cost of confiscating entrepreneurial wealth is that this entails that entrepreneurs have less 'skin in the game', which reduces the amount of external finance they can obtain, thereby reducing investment. Consequently, the planner will never confiscate all entrepreneurs' capital. We then extend the model to an infinite-horizon setting and explore the welfare implications of different rates of capital taxation.
'Job Destruction and Persistent Employment Slumps.' (abstract)
'Semi-Voluntary Unemployment, Wage Rigidity and Cyclical Fluctuations.' (abstract)
'Price Norms, Higher-Order Beliefs and Macroeconomic Fluctuations.' (abstract)
'Capital Deaccumulation and the Large Persistent Effects of Financial Crises.' Job Market Paper. (abstract)
Presented at the 2015 MMF Research Group, Fall 2015 Midwest Macro Meeting.
WORKS IN PROGRESS
'Entrepreneurship, Agency Frictions and Redistributive Capital Taxation', with Corina Boar.
Many models of optimal capital taxation, such as Chamley (1986), imply that governments would optimally confiscate all capital at the beginning of time, unless this is exogenously ruled out. This runs counter to conventional economic wisdom, which suggests that firms will be managed less efficiently if all capital is owned by the state. We model this efficiency cost of confiscating capital, considering optimal Ramsey capital taxation in a setting with workers, who live hand-to-mouth, and entrepreneurs, who manage firms and face a moral hazard problem due to their investment being unobservable. Entrepreneurs fund investment through optimal contracts with risk-neutral banks. We first consider a two-period problem where the social planner has the power to confiscate any amount of entrepreneurial capital at the beginning of the first period. The social planner optimally chooses to confiscate some entrepreneurial capital in order to redistribute wealth from entrepreneurs to workers. However the cost of confiscating entrepreneurial wealth is that this entails that entrepreneurs have less 'skin in the game', which reduces the amount of external finance they can obtain, thereby reducing investment. Consequently, the planner will never confiscate all entrepreneurs' capital. We then extend the model to an infinite-horizon setting and explore the welfare implications of different rates of capital taxation.
'Job Destruction and Persistent Employment Slumps.' (abstract)
'Semi-Voluntary Unemployment, Wage Rigidity and Cyclical Fluctuations.' (abstract)
'Price Norms, Higher-Order Beliefs and Macroeconomic Fluctuations.' (abstract)
