This paper investigates the equilibrium implications of the presence of nonlinearly taxed, redundant securities, and of the resulting tax arbitrage opportunities. Heterogeneity in taxation leads to discrepancies in assets' pre-tax market prices of risk. We show that this mispricing is set so that agents e®ectively cooperate to minimize aggregate taxes, even though individually each agent may no...

This paper studies the links between housing policies and aggregate energy use in the U.S. I connect two strands of literature on cities–that cities vary in their per capita energy use and in terms of housing supply elasticity–to measure the e↵ects of location choice and housing consumption on aggregate energy use. I build a dynamic spatial equilibrium model of U.S. metropolitan areas, accounti...

We estimate labour supply elasticities at the micro level and show what we can learn from possibly very heterogeneous elasticities for aggregate behaviour. We consider both intertemporal and intratemporal choices, and identify intensive and extensive responses in a consistent life cycle framework, using US CEX data. There is substantial heterogeneity in how individuals respond to wage changes a...

This paper examines the dynamic effects of oil price shocks in addition to the aggregate supply and demand shocks on macroeconomic fluctuations in four sample economies: Indonesia, Malaysia, Pakistan and Thailand. We aim to discover whether oil price shocks play a crucial role in explaining output and domestic price fluctuation in small emerging economies after 1990s. We are also keen to assess...

We analyze the dynamic e¤ects of lumpy factor adjustments at the …rm level onto the aggregate economy. We …nd that distinguishing between capital and labour as lumpy factors within the production function result in very di¤erent dynamics for aggregate output, investment and labour in an otherwise standard real business cycle model. Lumpy capital leaves the RBC mainly unchanged, while lumpy labo...

An aggregate game is a normal-form game with the property that each player’s payoff is a function only of his own strategy and an aggregate function of the strategy profile of all players. Aggregate games possess a set of purely algebraic properties that can often provide simple characterizations of equilibrium aggregates without first requiring that one solves for the equilibrium strategy prof...

There are two ways to read the paper by Ljungqvist and Sargent (and these two ways are reflected in the two parts of the title). First, as a response to Prescott’s argument about labor supply and taxes. Second, as an exploration of the implications of heterogeneity for aggregate labor supply. While the first clearly provided the motivation for the paper, I believe the second is likely to prove ...