An agricultural policy option where individual producers’ support prices increase with the proportion of land set-aside is evaluated. A theoretical framework is presented and a stochastic simulation model is developed to generate estimates of the impacts of the policy on aggregate and regional distribution of government payments and farm-level income. Results indicate that significant land idli...

a r t i c l e i n f o Keywords: Income tax deductions for losses Private insurance Optimal income tax Kaplow (1992) shows that allowing income tax deductions for losses as partial insurance is undesirable in the presence of private insurance markets. This paper revisits the issue by considering a model that integrates Kaplow (1992) with Stiglitz (1982). We address the following question: Whethe...

The federal role in education finance is commonly seen as compensatory. The federal government gives large sums of money to low-income schools and school districts through programs such as Title 1. Yet, this view of federal aid is based solely on direct educational expenditures. The federal government and state governments also support schools through tax deductions and tax credits for educatio...

In this paper we use the common perspective provided by the neoclassical growth model to evaluate the size of the distortions associated with different monetary and fiscal policies designed to finance a given sequence of government expenditures. We calibrate a neoclassical monetary economy to match important features of the U.S. economy and use it to provide a quantitative assessment of the wel...

Stricter laws require more incisive and costlier enforcement. Because enforcement activity depends both on available tax revenue and the honesty of officials, the optimal legal standard of a benevolent government is increasing in per capita income and decreasing in officials’ corruption. In contrast to the “tollbooth view” of regulation, the standard chosen by a self-interested government is a ...

This paper uses an overlapping generations model to analyze the relationship between economic development and income distribution and the effect of government taxation and transfers on the distribution of income. Individuals differ in their inherited stocks of human capital and therefore in their productivity and income, and their leisure and investment decisions. Individual productivity depend...

the effects of social welfare programs on poverty and income inequality in China in 1989 and 2009. The findings indicate that social welfare programs have played an important role in poverty reduction, reducing poverty rates by approximately 32%. The effects on income inequality, however, were reversed. For example, the ratio of top to bottom income quintiles grew after government transfers, su...

If a government imposes a tax on capital income, it may, as a result, lower the private rate of return on capital below the growth rate of an economy, thereby giving rise to the possibility of running a permanent deficit. Since, however, the before-tax rate of return and not the after-tax rate of return is relevant for judging the dynamical efficiency of the economy, the possibility of a perman...

This paper examines the mechanism through which pro-growth policies such as government spending on infrastructure might a¤ect the dynamics of inequality. We develop a model in which government-provided infrastructure is not only the engine of growth, but also a critical determinant of the distributions of wealth, income, and welfare. Government spending on infrastructure by itself is shown to b...

Establishing a uniform 15% VAT rate for every good and service subject to this tax would generate additional fiscal resources of, at least, 81.2 billion pesos. The approximate cost of granting an exact compensation for the first three quartiles of the income distribution (in case of considering this as target population) for the impact of such measure—under the pessimistic assumption that 75% o...