| TOPICS | READINGS |
|---|---|
| 1. Introduction to tax analysis | |
| 1.1 Partial equilibrium tax analysis | Salanié, B. Economics of Taxation, chapter 1. |
| 1.2 The efficiency costs of taxation | Browning, E. "The Non-Tax Wedge." Journal of Public Economics 53 (1994): 419-434. Chetty, R., A. Looney, and K. Kroft. "Salience and Taxation: Theory and Evidence." NBER Working Paper No. 13330, August 2007. Diamond, P., and D. McFadden. "Some Uses of the Expenditure Function in Public Finance." Journal of Public Economics 3 (1974): 3-21. Finkelstein, A. "E-Z Tax: Tax Salience and Tax Rates." NBER Working Paper No. 12924, February 2007. Goulder, L., and R. Williams. "The Substantial Bias from Ignoring General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution." Journal of Political Economy 111 (2003): 898-927. Hausman, J. "Efficiency Effects on the U.S. Economy from Wireless Taxation." National Tax Journal 53 (2000): 733-742. ———. "Exact Consumers Surplus and Deadweight Loss." American Economic Review 81 (1981): 622-676. Hausman, J., and W. Newey. "Nonparametric Measurement of Exact Consumers Surplus and Deadweight Loss." Econometrica 63 (1995): 1445-1476. Marion, J., and E. Muehlegger. "Measuring Illegal Activity and the Effects of Regulatory Innovation: A Study of Diesel Fuel Tax Evasion." Kennedy School of Government Working Paper RWP07-026, 2007. |
| 1.3 General equilibrium tax incidence | Atkinson, A., and J. Stiglitz. Lectures on Public Economics, chapter 6. Bradford, D. "Factor Prices May be Constant but Factor Returns are Not." Economic Letters 1 (1978): 199-203.
Cutler, D. "Tax Reform and the Stock Market: An Asset Price Approach." American Economic Review 78 (December 1988): 1107-1117.
Gravelle, J., and K. Smetters. "Who Bears the Burden of Corporate Taxation in an Open Economy?" NBER Working Paper No. 8280, May 2001. Harberger, A. "The Incidence of the Corporation Income Tax." Journal of Political Economy 70 (1962): 215-240. Poterba, J. "Tax Subsidies to Owner-Occupied Housing: An Asset Market Approach." Quarterly Journal of Economics 99 (1984): 729-752. |
| 1.4 Tax reform: income taxes vs. consumption taxes | Altig, D., A. Auerbach, L. Kotlikoff, K. Smetters, and J. Walliser. "Simulating Fundamental Tax Reform in the United States." American Economic Review 91 (June 2001): 574-595. Auerbach, A. "The Choice Between Income and Consumption Taxes: A Primer." NBER Working Paper No. 12307, June 2006.
Poterba, J. "Lifetime Incidence and the Distributional Burden of Excise Taxes." American Economic Review 79 (May 1989): 325-330. |
| 2. Optimal commodity taxation | |
| 2.1 Optimal commodity taxes: Ramsey and beyond |
Chari, V. V., and P. J. Kehoe. "Optimal Fiscal and Monetary Policy." In Handbook of Macroeconomics. Vol. 1C. Edited by J. Taylor and M. Woodford. Amsterdam, The Netherlands: Elsevier, 1999, chapter 26. ISBN:
Deaton, A., and N. Stern. "Optimally Uniform Commodity Taxes, Taste Differences, and Lump Sum Grants." Economics Letters 20 (1986): 263-266. Diamond, P. "A Many-Person Ramsey Tax Rule." Journal of Public Economics 4 (1975): 335-342. Diamond, P., and J. Mirrlees. "Optimal Taxation and Public Production I: Production Efficiency," and "Optimal Taxation and Public Production II: Tax Rules." American Economic Review 61 (1971): 8-27 and 261-278. Dixit, A. "Welfare Effects of Tax and Price Changes." Journal of Public Economics 4 (1975): 103-123. Myles, G. Public Economics, chapter 4. Naito, H. "Re-Examination of Uniform Commodity Taxes Under a Non-Linear Income Tax System and Its Implication for Production Efficiency." Journal of Public Economics 71 (1999): 165-188.
Slemrod, J. "Optimal Taxation and Optimal Tax Systems." Journal of Economic Perspectives 4 (Winter 1990): 157-178. |
| 2.2 Optimal corrective taxation | Barthold, T. "Issues in the Design of Environmental Excise Taxes." Journal of Economic Perspectives 8 (Winter 1994): 133-152.
Diamond, P. "Consumption Externalities and Imperfect Corrective Pricing." Bell Journal of Economics 4 (1973): 526-538. Goulder, L. "Environmental Taxation and the Double Dividend: A Reader's Guide." International Tax and Public Finance 2 (August 1995): 157-183.
|
| 3. Taxation of labor income | |
| 3.1 Theory of income taxation | Akerlof, G. "The Economics of Tagging as Applied to the Optimal Income Tax." American Economic Review 68 (1978): 8-19. Allen, F. "Optimal Linear Income Taxation with General Equilibrium Effects on Wages." Journal of Public Economics 17 (1982): 135-144. Diamond, P. "Optimal Income Taxation: An Example with a U-Shaped Pattern of Optimal Marginal Tax Rates." American Economic Review 88 (1998): 83-95. Helpman, E., and E. Sadka. "The Optimal Linear Income Tax." Journal of Public Economics 9 (1978): 383-393. Immonen, R., R. Kanbur, M. Keen, and M. Tuomala. "Tagging and Taxing: The Optimal Use of Categorical and Income Information in Designing Tax/Transfer Schemes." Econometrica 65 (May 1998): 179-192. Maskin, E., and J. Riley. "Input versus Output Incentive Schemes." Journal of Public Economics 28 (1985): 1-24. Kleven, H., C. Kreiner, and E. Saez. "The Optimal Income Taxation of Couples as a Multidimensional Screening Problem." Working Paper, University of California-Berkeley, 2007. Mirrlees, J. "Exploration in the Theory of Optimal Income Taxation." Review of Economic Studies 38 (1971): 175-208. Saez, E. "Using Elasticities to Derive Optimal Income Tax Rates." Review of Economic Studies 68 (2001): 205-229. Sheshinski, E. "The Optimal Linear Income Tax." Review of Economic Studies 39 (1972): 297-302. Slemrod, J., S. Yitzhaki, J. Mayshar, and M. Lundholm. "Optimal Two Bracket Linear Income Taxation." Journal of Public Economics 53 (1994): 269-290. Stern, N. "Optimum Taxes with Errors in Administration." Journal of Public Economics 17 (1982): 181-211. ———. "On the Specification of Models of Optimum Income Taxation." Journal of Public Economics 6 (1976): 123-162.
Werning, I. "Pareto Efficient Income Taxation." Mimeograph, Massachusetts Institute of Technology, April 2007. |
| 3.2 Empirical analysis of taxation and labor supply by Prime Age men |
Blomquist, S. "Restrictions in Labor Supply Estimation: Is the MaCurdy Critique Correct?" Economics Letters 47 (1995): 229-235. ———. "Estimation Methods for Male Labor Supply Functions: How to Take Account of Nonlinear Taxes." Journal of Econometrics 70 (1996): 383-405. Blomquist, S., M. Eklof, and W. Newey. "Tax Reform Evaluation Using Nonparametric Methods: Sweden 1980-1991." Journal of Public Economics 79 (2001): 543-568. Blundell, R., A. Duncan, and C. Meghir. "Estimating Labor Supply Responses Using Tax Reforms." Econometrica 66 (1998): 827-862.
Bosworth, B., and G. Burtless. "Effects of Tax Reform on Labor Supply, Investment, and Saving." Journal of Economic Perspectives 6 (Winter 1992): 3-25. Burda, M., D. Hamermesh, and P. Weil. "The Distribution of Total Work in the EU and the US." IZA Discussion Paper No. 2270, August 2006. Eissa, N., H. Kleven, and C. Kreiner. "Evaluation of Four Tax Reforms in the United States: Labor Supply and Welfare Effects for Single Mothers." Journal of Public Economics 92, nos. 3-4 (April 2008): 795-816. Also available as NBER Working Paper No. 10935. Eklof, M., and H. Sacklen. "The Hausman-MaCurdy Controversy: Why Do the Results Differ Across Studies?" Journal of Human Resources 35 (1999): 204-220. Fullerton, D. "Reconciling Recent Estimates of the Marginal Welfare Cost of Taxation." American Economic Review 81 (1991): 302-308. ———. "On the Possibility of an Inverse Relationship Between Tax Rates and Government Revenue." Journal of Public Economics 19 (1982): 3-22.
Kumar, A. "Labor Supply, Deadweight Loss, and the Tax Reform Act of 1986: A Nonparametric Evaluation Using Panel Data." Journal of Public Economics 92, nos. 1-2 (February 2008): 236-253. Liebman, J., and E. Saez. "Earnings Responses to Increases in Payroll Taxes." Working Paper, University of California-Berkeley, 2006. Ljunge, M., and K. Ragan. "Labor Supply and the Tax Reform of the Century." Mimeograph, University of Chicago, 2005.
MaCurdy, T. "An Empirical Model of Labor Supply in a Lifecycle Setting." Journal of Political Economy 89 (1981): 1059-1085. ———. "Work Disincentive Effects of Taxes: A Reexamination of Some Evidence." American Economic Review 80 (May 1992): 243-249. Meghir, C. "Labor Supply and Taxation." Mimeograph, Institute for Fiscal Studies, 2007.
Ohanian, L., A. Raffo, and R. Rogerson. "Long-Term Changes in Labor Supply and Taxes: Evidence from OECD Countries, 1956-2004." NBER Working Paper No. 12786, December 2006. Prescott, E. "Why Do Americans Work So Much More Than Europeans?" Federal Reserve Bank of Minneapolis Review (July 2004): 2-13. Also available as NBER Working Paper No. 10316, February 2004. ———. "Nobel Lecture: The Transformation of Macroeconomic Policy and Research." Journal of Political Economy 114 (April 2006): 203-235. Rogerson, R. "Taxation and Market Work: Is Scandinavia an Outlier?" NBER Working Paper No. 12890, February 2007. Rogerson, R., and J. Wallenius. "Micro and Macro Elasticities in a Life Cycle Model with Taxes." NBER Working Paper No. 13017, April 2007. Saez, E. "Do Taxpayers Bunch at Kink Points?" Mimeograph, University of California-Berkeley Economics Department, 2002. Also available as NBER Working Paper No. 7366, September 1999. Showalter, M., and N. Thurston. "Taxes and Labor Supply of High-Income Physicians." Journal of Public Economics 66 (October 1997): 73-98. Ziliak, J., and T. Kniesner. "Estimating Life Cycle Labor Supply Tax Effects." Journal of Political Economy 107 (April 1999): 326-359. |
| 3.3 Taxation and labor supply of married women | Eissa, N. "Taxation and Labor Supply of Married Women: The Tax Reform Act of 1986 as a Natural Experiment." NBER Working Paper No. 5023, February 1995. Kumar, A. "Taxes, Deadweight Loss, and Intertemporal Female Labor Supply: Evidence from Panel Data." Federal Reserve Bank of Dallas, 2004. Mroz, T. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions." Econometrica 55 (1987): 765-800. Triest, R. "The Effect of Income Taxation on Labor Supply in the United States." Journal of Human Resources 25 (Summer 1990): 491-516. |
| 3.4 The Earned Income Tax Credit: taxes and labor supply at low incomes | Browning, E. "Effects of the Earned Income Tax Credit on Income and Welfare." National Tax Journal 48 (1995): 23-43. Cancian, M., and A. Levinson. "Labor Supply Effects of the EITC: Evidence from Wisconsin's Supplemental Benefit for Families with Three Children." National Tax Journal 59 (2006): 781-800. Dickert, S., S. Houser, and J. Scholz. "Taxes and the Poor: A Micro-simulation Study of Implicit and Explicit Taxes." National Tax Journal 47 (1994): 621-638. Eissa, N., and J. Liebman. "Labor Supply Response to the Earned Income Tax Credit." Quarterly Journal of Economics 111 (May 1996): 605-637. Eissa, N., and H. Hoynes. "Taxes and the Labor Market Participation of Married Couples: The Earned Income Tax Credit." Journal of Public Economics 88 (2004): 1931-1958.
Hotz, V., C. Mullin, and J. K. Scholz. "Examining the Effect of the EITC on the Labor Market Participation of Families on Welfare." NBER Working Paper No. 11968, January 2006. Meyer, B., and D. Rosenbaum. "Making Single Mothers Work: Recent Tax and Welfare Policy and Its Effects." National Tax Journal 53 (December 2000, Part 2): 1027-1061. Saez, E. "Optimal Income Transfer Programs: Intensive vs. Extensive Labor Supply Responses." Quarterly Journal of Economics 117 (August 2002): 1039-1074. Meyer, B. "Labor Supply at the Extensive and Intensive Margins: The EITC, Welfare, and Hours Worked." American Economic Review 92 (May 2002): 373-379. |
| 3.5 The social security earnings test and labor supply of the elderly | Friedberg, L. "The Labor Supply Effects of the Social Security Earnings Test." Review of Economics and Statistics 82 (2000): 46-63. Gruber, J., and P. Orszag. "Does the Social Security Earnings Test Affect Labor Supply and Benefits Receipt?" National Tax Journal 56 (2003): 755-773. Loughran, D., and S. Haider. "The Effect of the Social Security Earnings Test on Male Labor Supply: New Evidence from Survey and Administrative Data." Journal of Human Resources 43, no. 1 (Winter 2008): 57-87. |
| 3.6 Tax rates and taxable income | Aarbu, K., and T. Thoresen. "Income Responses to Tax Changes: Evidence from the Norwegian Tax Reform." National Tax Journal 54 (June 2001): 319-338. Auerbach, A., and J. Slemrod. "The Economic Effects of the Tax Reform Act of 1986." Journal of Economic Literature 35 (June 1997): 589-632. Auten, G., and R. Carroll. "The Effect of Income Taxes on Household Income." Review of Economics and Statistics 81 (November 1999): 681-693. Bianchi, M., B. Gudmundsson, and G. Zoega. "Iceland's Natural Experiment in Supply-Side Economics." American Economic Review 91 (December 2001): 1564-1579.
Feldstein, M. "The Effects of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform." Journal of Political Economy 103 (June 1995): 551-571. ———. "Tax Avoidance and the Deadweight Loss of the Income Tax." Review of Economics and Statistics 81 (November 1999): 674-681. Goolsbee, A. "Evidence on the High-Income Laffer Curve from Six Decades of Tax Reform." Brookings Papers on Economic Activity 2 (1999): 1-47. ———. "What Happens When You Tax the Rich? Evidence from Executive Compensation." Journal of Political Economy 108 (April 2000): 352-378. Gruber, J. and E. Saez. "The Elasticity of Taxable Income: Evidence and Implications." Journal of Public Economics 84 (April 2002): 1-32. Lindsey, L. "Individual Taxpayer Response to Tax Cuts, 1982-1984: With Implications for the Revenue Maximizing Tax Rate." Journal of Public Economics 33 (1987): 173-206. Sillamaa, M., and M. Veall. "The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1988 Tax Flattening in Canada." Journal of Public Economics 80 (2001): 341-356. Slemrod, J. "Methodological Issues in Measuring and Interpreting Taxable Income Elasticities." National Tax Journal 51 (1998): 773-788. Singleton, P. "The Effect of Taxes on Taxable Earnings: Evidence from the 2001-2004 U.S. Federal Tax Acts." Mimeograph, University of Maryland Department of Economics, 2006. U.S. Congressional Budget Office, Recent Literature on Taxable Income Elasticities, December 2004. |
| 4. Taxation and saving | |
| 4.1 Background: capital income, wealth, and saving behavior | Bucks, B., A. Kennickell, and K. Moore. "Recent Changes in U.S. Family Finances: Evidence from the 2001 and 2004 Survey of Consumer Finances." Federal Reserve Bulletin 92 (January 2006): 1-38. Altonji, J., F. Hayashi, and L. Kotlikoff. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence." Journal of Political Economy 105 (December 1997): 1121-1166. Bernheim, B., A. Shleifer, and L. Summers. "The Strategic Bequest Motive." Journal of Political Economy 93 (December 1985): 1045-1076. Bernheim, B., and S. Severinov. "Bequests as Signals: An Explanation for the Equal Division Puzzle." Journal of Political Economy 111 (August 2003): 733-764. DeNardi, M., E. French, J. Jones. "Differential Mortality, Uncertain Medical Expenses, and the Saving of Elderly Singles." Federal Reserve Bank of Chicago Working Paper 2005-13, 2005. Dynan, K., J. Skinner, and S. Zeldes. "Do the Rich Save More?" Journal of Political Economy 112 (April 2004): 397-444.
Kotlikoff, L. "Intergenerational Transfers and Saving." Journal of Economic Perspectives 2 (Spring 1988): 41-58. Modigliani, F. "The Role of Intergenerational Transfers and Lifecycle Saving in the Accumulation of Wealth." Journal of Economic Perspectives 2 (Spring 1988): 15-40.
Wilhelm, M. "Bequest Behavior and the Effect of Heirs Earnings: Testing the Altruistic Model of Bequests." American Economic Review 86 (September 1996): 874-892. |
| 4.2 The optimal taxation of capital | Abel, A. "Optimal Taxation When Consumers Have Endogenous Benchmark Levels of Consumption." Review of Economic Studies 72 (January 2005): 21-42. Aiyagari, S. "Optimal Capital Income Taxation with Incomplete Markets, Borrowing Constraints, and Constant Discounting." Journal of Political Economy 103 (1995): 1158-1175. Albanesi, S., and C. Sleet. "Dynamic Optimal Taxation with Private Information." Review of Economic Studies 73 (2006): 1-30. Atkeson, A., V. Chari, and P. Kehoe. "Taxing Capital Income: A Bad Idea." Federal Reserve Bank of Minneapolis Quarterly Review 23, no. 3 (Summer 1999): 3-18. Atkinson, A., and A. Sandmo. "Welfare Implications of the Taxation of Savings." Economic Journal 90 (1980): 529-549. Atkinson, A., and J. Stiglitz. Lectures in Public Economics, chapter 8. Benigno, P., and M. Woodford. "Optimal Taxation in an RBC Model: A Linear Quadratic Approach." Journal of Economic Dynamics and Control 30 (2006): 1445-1489. Chamley, C. "Efficient Tax Reform in a Dynamic Model of General Equilibrium." Quarterly Journal of Economics 100 (1985): 335-356. ———. "Optimal Taxation of Capital Income in General Equilibrium with Infinite Lives." Econometrica 54 (1986): 607-622. Chari, V. V., and P. Kehoe. "Optimal Fiscal and Monetary Policy." In Handbook of Macroeconomics. Vol. 1C. Edited by J. Taylor and M. Woodford. Amsterdam, The Netherlands: Elsevier, 1999, chapter 26. ISBN: Diamond, P. "The Incidence of an Interest Income Tax." Journal of Economic Theory 2 (1970): 211-224. Erosa, A., and M. Gervais. "Optimal Taxation in Life-Cycle Economies." Journal of Economic Theory 105 (2002): 338-369. Farhi, E., and I. Werning. "Capital Taxation: Quantitative Explorations of the Inverse Euler Equation." Mimeograph, Massachusetts Institute of Technology, 2006. Golosov, M., N. Kocherlakota, and A. Tsyvinski. "Optimal Indirect and Capital Taxation." Review of Economic Studies 70 (2003): 569-588. Golosov, M., and A. Tsyvinski. "Optimal Taxation with Endogenous Insurance Markets." Quarterly Journal of Economics 122 (2007): 487-534.
Feldstein, M. "The Welfare Cost of Capital Income Taxation." Journal of Political Economy 86 (April 1978): S29-S52. Judd, K. "Optimal Taxation in Dynamic Stochastic Economies: Theory and Evidence." Mimeograph, Hoover Institution, 1989. (PDF)# ———. "The Welfare Cost of Factor Taxation in a Perfect Foresight Model." Journal of Political Economy 95 (1987): 675-709. ———. "Redistributive Taxation in a Simple Perfect Foresight Model." Journal of Public Economics 28 (October 1985): 59-83. Kocherlakota, N. "Zero Expected Wealth Taxes: A Mirrlees Approach to Dynamic Optimal Taxation." Econometrica 73 (September 2005): 1587-1622. ———. "Advances in Dynamic Optimal Taxation." In Advances in Economics and Econometrics: Theory and Applications, Ninth World Congress. Vol. 1. Edited by R. Blundell, W. Newey, and T. Persson. Cambridge, United Kingdom: Cambridge University Press, 2006, pp. 269-297. ISBN: Krusell, P., B. Kuruscu, and A. Smith, Jr. "Temptation and Taxation." Working paper, Yale-School of Medicine, 2005. Lucas, R. "Supply-Side Economics: An Analytical Review." Oxford Economic Papers 42 (1990): 293-316.
Saez, E. "Optimal Progressive Capital Income Taxation in the Infinite Horizon Model." NBER Working Paper No. 9046, July 2002. Stokey, N., and S. Rebelo. "Growth Effects of Flat-Rate Taxes." Journal of Political Economy 103 (1995): 519-550. Werning, I. "Optimal Fiscal Policy with Redistribution." Quarterly Journal of Economics 122 (2007): 925-968. |
| 4.3 Tax policy, rates of return, and saving | Abrar, M. "The Interest Elasticity of Saving and the Functional Form of the Utility Function." Southern Economic Journal 55 (January 1989): 594-600. Atkinson, A., and J. Stiglitz. Lectures in Public Economics, chapter 3. Attanasio, O., and M. Wakefield. "A Review of the Effects of Taxes on Consumption and Saving." Mimeograph, Institute for Fiscal Studies-London, 2007. Barsky, R., T. Juster, M. Kimball, and M. Shapiro. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study." Quarterly Journal of Economics 112 (1997): 537-579.
Boskin, M. "Taxation, Savings, and the Rate of Interest." Journal of Political Economy 86 (1978): S3-S27. Hall, R. "Intertemporal Substitution in Consumption." Journal of Political Economy 96 (April 1988): 339-357. Mulligan, C. "What Do Aggregate Consumption Euler Equations Say About the Capital Income Tax Burden?" American Economic Review 94 (May 2004): 166-170. ———. "Capital, Interest, and Aggregate Intertemporal Substitution." NBER Working Paper No. 9373, December 2002. Ogaki, M., and C. Reinhart. "Measuring Intertemporal Substitution: The Role of Durable Goods." Journal of Political Economy 106 (October 1998): 1078-1098. Summers, L. "Capital Taxation and Accumulation in a Life Cycle Model." American Economic Review 71 (September 1981): 533-544. Vissing-Jorgensen, A. "Limited Asset Market Participation and the Elasticity of Intertemporal Substitution." Journal of Political Economy 110 (August 2002): 825-853. |
| 4.4 Targeted tax subsidies to saving | Agnew, J., P. Balduzzi, and A. Sunden. "Portfolio Choice and Trading in a Large 401(k) Plan." American Economic Review 93 (March 2003): 193-215. Amromin, G., J. Huang, and C. Sialm. "The Tradeoff Between Mortgage Prepayments and Tax-Deferred Retirement Saving." Journal of Public Economics 91, no. 10 (November 2007): 2014-2040. Ayuso, J., J. Jimeno, and E. Villanueva. "The Effects of the Introduction of Tax Incentives on Retirement Saving." Bank of Spain Working Paper No. 724, 2007. Benjamin, D. "Does 401(k) Eligibility Increase Saving? Evidence from Propensity Score Subclassification." Journal of Public Economics 87 (May 2003): 1259-1290. Duflo, E., W. Gale, J. Liebman, P. Orszag, and E. Saez. "Saving Incentives for Low and Middle-Income Families: Evidence from a Field Experiment with H and R Block." Quarterly Journal of Economics 121 (2006): 1311-1346. Duflo, E., and E. Saez. "Participation and Investment Decisions in a Retirement Plan: The Influence of Colleagues' Choices." Journal of Public Economics 85 (July 2002): 121-148. Engen, E., W. Gale, and J. Scholz. "Do Saving Incentives Work?" Brookings Papers on Economic Activity 2 (1994): 85-180. ———. "The Illusory Effects of Saving Incentives." Journal of Economic Perspectives 10 (Fall 1996): 113-138. Gale, W., and J. Scholz. "IRAs and Household Saving." American Economic Review 84 (December 1994): 1233-1260. Gale, W. "The Effects of Pensions on Household Wealth: A Re-evaluation of Theory and Evidence." Journal of Political Economy 106 (August 1998): 706-723. Madrian, B., and D. Shea. "The Power of Suggestion: Inertia in 401(k) Participation and Saving Behavior." Quarterly Journal of Economics 116 (November 2001): 1149-1187. Milligan, K. "How Do Contribution Limits Affect Contributions to Tax-Preferred Saving Accounts?" Journal of Public Economics 87 (February 2003): 253-282. Poterba, J., J. Rauh, S. Venti, and D. Wise. "Defined Contribution Plans, Defined Benefit Plans, and the Accumulation of Retirement Wealth." Journal of Public Economics 91, no. 10 (November 2007): 2062-2086. Poterba, J., S. Venti, and D. Wise. "Do 401(k) Contributions Crowd Out Other Personal Saving?" Journal of Public Economics 58 (September 1995): 1-32. ———. "How Retirement Saving Programs Increase Saving." Journal of Economic Perspectives 10 (Fall 1996): 91-112.
|
| 5. Taxation and firm behavior | |
| 5.1 Taxation of corporate capital: investment incentives | Auerbach, A. "Taxation, Corporate Financial Policy, and the Cost of Capital." Journal of Economic Literature 21 (1983): 905-940. ———. "The Tax Reform Act of 1986 and the Cost of Capital." Journal of Economic Perspectives 1 (1987): 73-86. Bernanke, B., H. Bohn, and P. Reiss. "Alternative Non-nested Specification Tests of Time Series Investment Models." Journal of Econometrics 37 (March 1988): 293-326. Blundell, R., S. Bond, M. Devereux, and F. Schiantarelli. "Investment and Tobin's Q: Evidence from Company Panel Data." Journal of Econometrics 51 (January/February 1992): 233-258. Bris, A., I. Welch, and N. Zhu. "The Costs of Bankruptcy." Journal of Finance 61 (2006): 1253-1303. Caballero, R., E. Engel, and J. Haltiwanger. "Plant Level Adjustment and Aggregate Investment Dynamics." Brookings Papers on Economic Activity 2 (1995): 1-54.
Cummins, J., K. Hassett and S. Oliner. "Investment Behavior, Observable Expectations, and Internal Funds." American Economic Review 96 (June 2006): 796-810. Desai, M., and A. Goolsbee. "Investment, Overhang, and Tax Policy." Brookings Papers on Economic Activity 2 (2004): 285-338. Erickson, T., and T. Whited. "Measurement Error and the Relationship Between Investment and q." Journal of Political Economy 108 (2000): 1027-1057. Fazzari, S., R. Hubbard, and B. Peterson. "Financing Constraints and Corporate Investment." Brookings Papers on Economic Activity 1 (1988): 141-195. Goolsbee, A. "Investment Incentives and the After-Tax Price of Capital Goods." Quarterly Journal of Economics 113 (1998): 121-148.
House, C., and M. Shapiro, "Temporary Tax Incentives: Theory with Evidence from Bonus Depreciation." American Economic Review 98, no. 3 (June 2008): 737-768. Lamont, O. "Cash Flow and Investment: Evidence from Internal Capital Markets." Journal of Finance 52 (March 1997): 83-109. Summers, L. "Taxation and Corporate Investment: A q-Theory Approach." Brookings Papers on Economic Activity 1 (1981): 67-127. |
| 5.2 Taxation and financial policy: debt vs. equity | Fama, E., and K. French. "Financing Decisions: Who Issues Stock?" Journal of Financial Economics 76 (June 2005): 549-582. Givoly, D., C. Hayn, A. Ofer, and O. Sarig. "Taxes and Capital Structure: Evidence from Firms' Responses to the Tax Reform Act of 1986." Review of Financial Studies 5, no. 2 (1992): 331-355. Graham, J. "Taxes and Corporate Finance: A Review." Review of Financial Studies 16, no. 4 (Winter 2003): 1075-1129. ———. "Debt and the Marginal Tax Rate." Journal of Financial Economics 41 (May 1996): 41-74. ———. "How Big Are the Tax Benefits of Debt?" Journal of Finance 55 (October 2000): 1901-1941. Mackie-Mason, J. "Do Taxes Affect Corporate Financing Decisions." Journal of Finance 45 (December 1990): 1471-1494. Miller, M. "Debt and Taxes." Journal of Finance 32 (1977): 261-275.
|
| 5.3 Taxation and financial policy: payout policy |
Auerbach, A., and K. Hassett. "On the Marginal Source of Investment Funds." Journal of Public Economics 87 (January 2003): 205-232.
Bagwell, L., and J. Shoven. "Cash Distributions to Shareholders." Journal of Economic Perspectives 3 (Summer 1989): 129-140. Baker, M., S. Nagel, and J. Wurgler. "The Effect of Dividends on Consumption." Brookings Papers on Economic Activity 1 (2007): 231-276. Bernheim, D. "Tax Policy and the Dividend Puzzle." RAND Journal of Economics 22 (Winter 1991): 455-476. Bernheim, D., and A. Wantz. "A Tax-Based Test of the Dividend Signalling Hypothesis." American Economic Review 85 (June 1995): 532-551. Boyd, J., and R. Jagannathan. "Ex-Dividend Price Behavior of Common Stocks." Review of Financial Studies 7 (Winter 1994): 711-741. Bradford, D., and R. Gordon. "Taxation and the Stock Market Value of Capital Gains and Dividends: Theory and Empirical Results." Journal of Public Economics 14 (1980): 109-136. Brav, A., J. Graham, C. Harvey, and R. Michaely. "Payout Policy in the 21st Century." Journal of Financial Economics 77 (September 2005): 483-528. Also available as NBER Working Paper No. 9657, April 2003. Brown, J., N. Liang, and S. Weisbenner. "Executive Financial Incentives and Payout Policy: Firm Responses to the 2003 Dividend Tax Cut." Journal of Finance 62 (2007): 1935-1966. Chetty, R., and E. Saez. "Dividend Taxes and Corporate Behavior: Evidence from the 2003 Dividend Tax Cut." Quarterly Journal of Economics 120 (August 2005): 791-834.
DeAngelo, H., L. DeAngelo, and R. Stulz. "Dividend Policy, Agency Costs, and Earned Equity." NBER Working Paper No. 10599, July 2004. Desai, M., and L. Jin. "Institutional Tax Clienteles and Payout Policy." NBER Working Paper No. 13283, July 2007. Gordon, R., and M. Dietz. "Dividends and Taxes." NBER Working Paper No. 12292, June 2006. Korinek, A., and J. Stiglitz. "Dividend Taxation and Intertemporal Arbitrage." Mimeograph, Columbia University, 2006. Poterba, J. "Taxation and Corporate Payout Policy." American Economic Review 94 (May 2004): 171-175.
|
| 6. Taxes and aggregate economic activity | |
| 6.1 Optimal stochastic taxes | Barro, R. "On the Determination of Public Debt." Journal of Political Economy 87 (1979): 940-971. Aiyagari, R., A. Marcet, T. Sargent, and J. Seppala. "Optimal Taxation without State-Contingent Debt." Journal of Political Economy 110 (December 2002): 1220-1254. Christiano, L., V. V. Chari and P. Kehoe. "Optimal Fiscal Policy in a Business Cycle Model." Journal of Political Economy 102 (August 1994): 617-652. Fahri, E. "Fiscal Policy when Markets are Incomplete and the Optimal Liability Structure." Mimeograph, Massachusetts Institute of Technology, 2005. Lucas, R., and N. Stokey. "Optimal Fiscal and Monetary Policy in an Economy without Capital." Journal of Monetary Economics 12 (1983): 55-93. Werning, I. "Optimal Dynamic Taxation." PhD dissertation, University of Chicago, 2002, chapter 2. ———. "Optimal Fiscal Policy with Redistribution." Quarterly Journal of Economics 122 (2007): 925-968. ———. "Tax Smoothing with Incomplete Markets." Mimeograph, Massachusetts Institute of Technology, 2005. |
| 6.2 Dynamic consistency issues | Acemoglu, D., M. Golosov, and A. Tsyvinski. "Markets vs. Governments: Political Economy of Mechanisms." NBER Working Paper No. 12224, May 2006. Benhabib, J., and A. Rustichini. "Optimal Taxes without Commitment." Journal of Economic Theory 77 (1997): 231-259. Fernandez-Villaverde, J., and A. Tsyvinski. "Optimal Fiscal Policy in a Business Cycle Model without Commitment." Mimeograph, University of Pennsylvania, 2002. Klein, P., and J.-V. Ríos-Rull. "Time-Consistent Optimal Fiscal Policy." International Economic Review 44 (2003): 1217-1246. Klein, P., P. Krusell, and J.-V. Ríos-Rull. "Time-Consistent Public Expenditures." Mimeograph, University of Pennsylvania, 2004. |
Table of Contents
Study Materials
Readings
This section contains documents that could not be made accessible to screen reader software. A "#" symbol is used to denote such documents.
 When you click the Amazon logo to the left of any citation and purchase the book (or other media) from Amazon.com, MIT OpenCourseWare will receive up to 10% of this purchase and any other purchases you make during that visit. This will not increase the cost of your purchase. Links provided are to the US Amazon site, but you can also support OCW through Amazon sites in other regions. Learn more. |
Texts
Although there are no required texts, the following two are strongly recommended:
Auerbach, Alan, and Martin Feldstein, eds. Handbook of Public Economics. Vol. 3. Amsterdam, The Netherlands: North Holland, 2002. ISBN: 9780444823144.
Salanié, Bernard. Economics of Taxation. Cambridge, MA: MIT Press, 2003. ISBN: 9780262194860.
Useful References
Atkinson, Anthony, and Joseph Stiglitz. Lectures in Public Economics. New York, NY: McGraw-Hill, 1980. ISBN: 9780070841062.
Auerbach, Alan, and Martin Feldstein, eds. Handbook of Public Economics. Vols. 1, 2, and 4. Amsterdam, The Netherlands: North Holland, 1985, 1987, and 2002. ISBN: 9780444876126 (vol. 1), 9780444879080 (vol. 2), 9780444823151 (vol. 4), and 9780444876676 (set).
Myles, Gareth. Public Economics. New York, NY: Cambridge University Press, 1995. ISBN: 9780521497695.
Stiglitz, Joseph. Economics of the Public Sector. 3rd ed. New York, NY: Norton, 2000. ISBN: 9780393966510.
Tresch, Richard. Public Finance: A Normative Theory. 2nd ed. New York, NY: Academic Press, 2002. ISBN: 9780126990515.
Readings by Topic
Readings in bold were covered in depth during lectures and recitations.
IZA – Institut zur Zukunft der Arbeit (Institute for the Study of Labor)
NBER – National Bureau of Economic Research