Portuguese Economic Journal, 2009, Volume 8, Nº 2
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- Estate taxation with warm-glow altruismPublication . Garriga, Carlos; Sánchez-Losada, FernandoThis article examines the properties of the optimal fiscal policy in an economy with warm-glow altruism (utility interdependence) and heterogeneous individuals. We propose a new efficiency concept, D-efficiency, that considers an implicit constraint in the act of giving: Donors cannot bequeath to donees more than their existing resources. Considering this constraint, we show that the market equilibrium is not socially efficient. The efficient level of bequest transfers can be implemented by the market with estate and labor-income subsidies and a capital-income tax. In the absence of lump-sum taxation, the government faces a trade-off between minimizing distortions and eliminating external effects. The implied tax policy differs from Pigovian taxation since the government’s ability to correct the external effects is limited. Finally, we show that the efficiency-equity trade-off does not affect the qualitative features of the optimal distortionary fiscal policy.
- Team production with inequity-averse agentsPublication . Jianpei, LiThis paper analyzes the effi ciency of team production when risk- neutral agents exhibit other-regarding preferences. It is shown that full effi - ciency can be sustained as an equilibrium of a budget-balancing mechanism that punishes some randomly chosen agents if output falls short of the effi cient level but distributes output equally otherwise. The result depends on agents being suffi ciently inequity-averse.
- The economic effects of improving investor rights in PortugalPublication . Castro, Rui; Clementi, Gian LucaThe Portuguese economy has performed remarkably well since join- ing the EU in 1986. Output per worker grew at an annual rate of 2.25%. The relative price of investment has declined. Real investment has increased compared to output, in part fuelled by an increase in capital inflows. At the same time, resource allocation seems to have improved as well: firm-level data shows a significant decline in the dispersion of labor productivity and size across firms. This paper argues that improvements in outside investor rights that have taken place since Portugal joined the EU is a prime candidate to explain this set of facts.