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NBER Working Papers and Publications
|January 2005||Firm-Specific Capital, Nominal Rigidities and the Business Cycle|
with Lawrence Christiano, Martin Eichenbaum, Jesper Linde: w11034
Macroeconomic and microeconomic data paint conflicting pictures of price behavior. Macroeconomic data suggest that inflation is inertial. Microeconomic data indicate that firms change prices frequently. We formulate and estimate a model which resolves this apparent micro - macro conflict. Our model is consistent with post-war U.S. evidence on inflation inertia even though firms re-optimize prices on average once every 1.5 quarters. The key feature of our model is that capital is firm-specific and pre-determined within a period.
Published: David Altig & Lawrence Christiano & Martin Eichenbaum & Jesper Linde, . "Firm-Specific Capital, Nominal Rigidities and the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics. citation courtesy of
|October 1997||Simulating U.S. Tax Reform|
with Alan J. Auerbach, Laurence J. Kotlikoff, Kent A. Smetters, Jan Walliser: w6248
This paper uses a new large-scale dynamic simulation model to compare the equity, efficiency, and macroeconomic effects of five alternative to the current U.S. federal income tax. These reforms are a proportional income tax, a proportional consumption tax, a flat tax, a flat tax with transition relief, and a progressive variant of the flat tax called the 'X tax.' The model incorporates intragenerational heterogeneity and kinked budget constraints. It predicts major macroeconomic gains (including an 11 percent increase in long-run output) from replacing the federal tax system with a proportional consumption tax. Future middle- and upper-income classes gain from this policy, but initial older generations are hurt by the policy's implicit capital levy. Poor members of current and future ge...
Published: Altig, David. "Simulating Fundamental Tax Reform in the United States." American Economic Review, 2001, 91(3), pp. 574-95.
|November 1991||Borrowing Constraints and Two-Sided Altruism With an Application to Social Security|
with Steve J. Davis: w3913
We develop the implications of borrowing constraints and two-sided altruism in an overlapping generations framework with agents who live three periods. Our analysis identifies six equilibrium patterns of intertemporal and intergenerational linkages in the no-loan economy, one of which corresponds to the traditional lifecycle model, and one of which corresponds to Barro's dynastic model. Novel linkage patterns involve parent-to-child transfers early in the life cycle, child-to-parent gifts late in the life cycle, or both. Capital accumulation behavior and the consequences of fiscal policy interventions depend, often critically, on which linkage patterns prevails. We show how unfunded social security interventions can significantly depress aggregate capital accumulation, even when every gene...
Published: Journal of Economic Dynamics and Control, 17 (1993), pp. 467-494 citation courtesy of
|June 1991||The Timing of Intergenerational Transfers, Tax Policy, and Aggregate Savings|
with Steve J. Davis: w3753
We analyze the interest rate and savings effects of fiscal policy in an overlapping generations framework that accommodates two observations: (1) The interest rate on consumption loans exceeds the rate of return to household savings. (2) Private intergenerational transfers are widespread and primarily occur early in the lifecycle of recipients. The wedge between borrowing and lending rates in our model arises from the asymmetric tax treatment of interest income and interest payments. Intergenerational transfers are altruistically motivated. Under the assumption that altruistic transfers occur in at least some family lines and other plausible conditions, we prove the invariance of capital's steady-state marginal product to government expenditures, government debt, the labor income tax sched...
Published: American Economic Review December 1992, Volume 82, No. 5 citation courtesy of