This paper studies an international tax policy design problem by employing a two-country dynamic general equilibrium model with incomplete asset markets. We investigate the possibility of welfareimproving active tax policies, in particular capital and labor income tax, under the non-cooperative Nash equilibrium and the cooperative equilibrium. Unlike the conventional wisdom regarding stabilizat...

In this paper we study the effect of contemporaneous aggregation of an arbitrarily large number of processes featuring dynamic conditional heteroskedasticity with short memory when heterogeneity across units is allowed for. We look at the memory properties of the limit aggregate. General, necessary, conditions for long memory are derived. More specific results relative to certain stochastic vol...