china s regional rebound effect based on modelling multi regional cge improving energy efficiency has been regarded as an important measure to reduce energy consumption yet the rebound effect has greatly shrunken the energy saving consequences of this measure to in

oligarchic family control social economic outcomes and the quality of government wealthy families as opposed to small public shareholders characterize ownership of the large corporate sectors of many countries around the world this paper shows that greater oligarchic family control over large corporations is associated with worse social economic outcomes it also correlates with more bureaucratic and more interventionist governments and less developed financial markets further tests show that red tape price controls and the lack of shareholder rights protection are the paramount factors relating to the extent of family control of large firms these results are broadly consistent with olson and others who argue that economically entrenched wealthy insiders pursue rent seeking activities to preserve the status quo and that this increases corruption and impedes growth

on the optimal progressivity of the income tax code this paper computes the optimal progressivity of the income tax code in a dynamic general equilibrium model with household heterogeneity in which uninsurable labor pro ductivity risk gives rise to a nontrivial income and wealth distribution a progressive tax system serves as a partial substitute for missing insurance markets and enhances an equal distribution of economic welfare these bene cial eects of a progressive tax system have to be traded oagainst the e ciency loss arising from distorting endoge nous labor supply and capital accumulation decisions a determination of the optimal progressivity of the income tax code therefore calls for a quantitative exploration using a utilitarian steady state social welfare criterion we nd that the optimal us income tax is well approximated by a at tax rate of19 5 and a xed deduction of about 3 700 the steady state welfare gains from a fundamental tax reform towards this tax system are equivalent to 0 4 higher consumption in each state of the world an explicit computation of the transition path induced by a reform of the current towards the optimal tax system indicates however that a majority of the population currently alive would suer welfare losses calling into question the political feasibility of such

optimal progressive labor income taxation and education subsidies when education decisions and intergenerational transfers are endogenous abstract we quantitatively characterize the optimal mix of progressive income taxes and education subsidies in a model with endogenous human capital formation borrowing constraints income risk and incomplete financial markets in addition to the distortions of labor supply progressive taxes weaken the incentives to acquire education the latter distortion can potentially be mitigated by an education subsidy we find that the welfare maximizing fiscal policy is indeed characterized by a substantially progressive labor income tax code and a positive subsidy for college education both the degree of tax progressivity and the education subsidy are larger than in the current us status quo

taxing capital not a bad idea after all we quantitatively characterize the optimal capital and labor income tax in an overlapping generations model with idiosyncratic uninsurable income shocks and permanent productivity difierences of households the optimal capital income tax rate is signiflcantly positive at 36 percent the optimal progressive labor income tax is roughly a at tax of 23 percent with a deduction of 7 200 relative to average household income of 42 000 the high optimal capital income tax is mainly driven by the life cycle structure of the model whereas the optimal progressivity of the labor income tax is attributable to the insurance and redistribution role of the tax system jel e62 h21 h24

a managerial decision model of international cooperative venture formation this paper develops a model of international cooperative venture formation that is centered on the decisionmaking process of mne executives central issues for managerial decisions are developed from the organizational studies literature a framework delineating the sequence and criteria used in the decision to form international cooperative ventures is developed from these defined issues and from existing models propositions pertaining to the venture formation decision process are outlined

governments as owners state owned multinational companies the globalization of state owned multinational companies somncs has become an important phenomenon in international business ib yet it has received scant attention in the literature we explain how the analysis of somncs can help advance the literature by extending our understanding of state owned firms soes and multinational companies mncs in at least two ways first we cross fertilize the ib and soes literatures in their analysis of foreign investment behavior and introduce two arguments the extraterritoriality argument which helps explain how the mnc dimension of somncs extends the soe literature and the non business internationalization argument which helps explain how the soe dimension of somncs extends the mnc literature second we analyze how the study of somncs can help develop new insights of theories of firm behavior in this respect we introduce five arguments the triple agency conflict argument in agency theory the owner risk argument in transaction costs economics the advantage and disadvantage of ownership argument in the resource based view rbv the power escape argument in resource dependence theory and the illegitimate ownership argument in neo institutional theory after our analysis we introduce the papers in the special issue that collectively reflect diverse and sophisticated research interest in the topic of somncs

state ownership and transparency in foreign direct investment we contribute to ib literature on state owned multinationals by examining an understudied element of mne strategy transparency drawing insight from accounting finance and political science we develop theory and hypotheses regarding ownership effects on fdi disclosure we argue that transparency of outward fdi depends on both state ownership and home and host country institutions we also posit that host governments harness their soes to exploit information disclosed by foreign mnes discouraging inward fdi transparency we test our hypotheses using a unique transaction level database from the global petroleum industry analyzing a sample of 965 investment disclosures across 81 developing and developed countries we find state ownership reduces mne transparency soes are less sensitive to host country political risk than private firms soes from better governed countries are more transparent and regardless of ownership foreign mnes are more opaque when investing in the presence of a host country soe

the one sector growth model with idiosyncratic shocks steady states and dynamics abstract this paper investigates the one sector growth model where agents receive idiosyncratic labor endowment shocks and face a borrowing constraint it is shown that any steady state capital stock lies strictly above the steady state in the model without idiosyncratic shocks in addition the capital stock increases monotonically when it is sufficiently far below a steady state however near a steady state there can be non monotonic economic dynamics

the impact of a broad based energy tax on the us economy abstract this paper investigates the impact of a broad based energy tax on the us economy particularly the agricultural sectors the analytical approach used consists of a general equilibrium model composed of 12 producing sectors 13 consuming sectors six household categories classified by income and a government the effects of a 10 cents btu 10 6 tax on energy on prices and quantities are examined the results are revealing

the effect of oil price increases on four oil poor developing countries a comparative analysis abstract computable general equilibrium models are used to compare for four oil poor developing countries ivory coast kenya south korea turkey the short and medium run adjustment pressures arising from the second oil price shock the results emphasize the extent of expenditure switching and expenditure and wage reduction needed to accomodate the shock in each country cross country variations in the extent of required adjustment are traced to key structural differences between the four economies

the surprising power of age dependent taxes this paper provides a new empirically driven application of the dynamic mirrleesian framework by studying a feasible and potentially powerful tax reform age dependent labour income taxation i show analytically how age dependence improves policy on both the intratemporal and intertemporal margins i use detailed numerical simulations calibrated with data from the u s panel study of income dynamics to generate robust policy implications age dependence 1 lowers marginal taxes on average and especially on high income young workers and 2 lowers average taxes on all young workers relative to older workers when private saving and borrowing are restricted finally i calculate and characterize the welfare gains from age dependence despite its simplicity age dependence generates a welfare gain equal to between 0 6 and 1 5 of aggregate annual consumption and it captures more than 60 of the gain from reform to the dynamic optimal policy the gains are due to substantial increases in both efficiency and equity when age dependence is restricted to be pareto improving the welfare gain is nearly as large

on the justice of decision rules which decision rules are the most efficient which are the best in terms of maximin or maximax we study these questions for the case of a group of individuals faced with a collective choice from a set of alternatives a key message from our results is that the set of optimal decision rules is well defined particularly simple and well known the class of scoring rules we provide the optimal scoring rules for the three different ideals of justice under consideration utilitarianism efficiency maximin and maximax the optimal utilitarian scoring rule depends crucially on the probability distribution of the utilities the optimal maximin respectively maximax scoring rule takes the optimal utilitarian scoring rule and applies a factor that shifts it towards negative voting respectively plurality voting

varieties in state capitalism outward fdi strategies of central and local state owned enterprises from emerging economy countries institutional diversity characterizing state owned enterprises soes from emerging economies holds critical but under examined implications for their internationalization activities different types of soes can exhibit distinct motivations strategic resources and adaptive capabilities for penetrating foreign markets to understand how such idiosyncratic differences emerge we conceptualize the heterogeneity of soes as an outcome of multiple institutional reform processes administrative and fiscal decentralization industrial restructuring and market liberalization which create diversity between soes affiliated with central and local levels of government building on the idea of institutions as configurations we elucidate how such reforms reconfigure soes constellation of resources capabilities and priorities which shape the parameters of their ability to negotiate for home and host country institutional legitimacy specifically we propose that the restructuring of central soes into national champions exposes them to stronger institutional pressures from home and host country governments while local soes which have fewer obligations to serve national strategic prerogatives display greater managerial autonomy and market orientation but lower levels of monopolistic behavior we discuss how such contrasting attributes contribute to variations in soes international business diversification patterns foreign subsidiary establishment and ownership modes and overseas location preferences recognition of soes organizational diversity holds important implications for theories on state owned multinationals

optimal taxation in life cycle economies abstract we use a very standard life cycle growth model in which individuals have a labor leisure choice in each period of their lives to prove that an optimizing government will almost always find it optimal to tax or subsidize interest income the intuition for our result is straightforward in a life cycle model the individual s optimal consumption work plan is almost never constant and an optimizing government almost always taxes consumption goods and labor earnings at different rates over an individual s lifetime one way to achieve this goal is to use capital and labor income taxes that vary with age if tax rates cannot be conditioned on age a nonzero tax on capital income is also optimal as it can imperfectly mimic age conditioned consumption and labor income tax rates journal of economic literature classification numbers e62 h21

the effects of an increase in energy efficiency on the kenya economy abstract there are reasons to believe that improved energy efficiency still is an important energy development policy despite stable oil prices abundant oil supplies and end of the cold war the political reasons are uncertainty of the current gulf situation and prevalent wars in the former eastern bloc countries increasing concern over global environmental problems the existence of imperfect energy markets and the desire for rapid economic growth in developing countries are the other reasons this paper analyses the effects of energy management policies on the kenyan economy using a computable general equilibrium model simulations show that an increase in energy efficiency leads to reduced dependence on foreign energy sources promotion of reliable domestic energy sources promotion of conservation of all forms of energy saves scarce foreign currency and preserves the environment

overcoming distrust how state owned enterprises adapt their foreign entries to institutional pressures abroad state owned so enterprises are subject to more complex institutional pressures in host countries than private firms these institutional pressures arise from a weak legitimacy of state ownership in some countries which arises from a combination of ideological conflicts perceived threats to national security and claimed unfair competitive advantage due to support by the home country government these institutional pressures directed specifically at so firms induce them to adapt their foreign entry strategies to reduce potential conflicts and to enhance their legitimacy testing hypotheses derived from this theoretical argument for subsidiaries of listed chinese firms we find that so firms adapt mode and control decisions differently from private firms to the conditions in host countries and these differences are larger where pressures for legitimacy on so firms are stronger these findings not only extend institutional theory to better explain differential effects on different entrants to an organizational field but demonstrate how foreign investors of idiosyncratic origins may proactively build legitimacy in host societies

taxation of human capital and wage inequality a cross country analysis wage inequality has been significantly higher in the united states than in continental european countries ceu since the 1970s moreover this inequality gap has further widened during this period as the us has experienced a large increase in wage inequality whereas the ceu has seen only modest changes this paper studies the role of labor income tax policies for understanding these facts we begin by documenting two new empirical facts that link these inequality differences to tax policies first we show that countries with more progressive labor income tax schedules have significantly lower before tax wage inequality at different points in time second progressivity is also negatively correlated with the rise in wage inequality during this period we then construct a life cycle model in which individuals decide each period whether to go to school work or be unemployed individuals can accumulate skills either in school or while working wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks progressive taxation compresses the after tax wage structure thereby distorting the incentives to accumulate human capital in turn reducing the cross sectional dispersion of before tax wages we find that these policies can account for half of the difference between the us and the ceu in overall wage inequality and 76 of the difference in inequality at the upper end log 90 50 differential when this economy experiences skill biased technological change progressivity also dampens the rise in wage dispersion over time the model explains 41 of the difference in the total rise in inequality and 58 of the difference at the upper end

on the distributional effects of reducing capital taxes this article asks whether household heterogeneity and market incompleteness have quantitatively important implications for the welfare effects of tax changes we compare a representative agent economy to an economy in which households face idiosyncratic uninsurable income risk the income process is consistent with empirical estimates and implies a realistic wealth distribution we find that capital tax cuts imply large welfare gains in the representative agent economy however when households are heterogeneous substantial redistribution during transition means that only a minority will support capital tax cuts whereas most households can expect large welfare losses

the myths and facts of energy efficiency abstract the debate about how much energy efficiency is socially desirable and what is the best way to finance and implement energy conservation measures has reached a critical junction in many countries the arguments have passed the stage of whether more energy efficiency is possible or desirable and are centred around how much and how best to implement them this is a survey article which attempts to shed some light on several critical issues in this debate first it distinguishes between what is technically possible v what is economically desirable in energy efficiency improvements second it looks at some of the alleged causes of social under investment in energy efficiency and identifies ways to reduce or eliminate them third it addresses the question of who is best equipped to implement energy efficiency improvements and how one may go about promoting it finally the paper addresses critical financing and equity questions

reducing dependence on oil imports abstract the legacy of higher oil prices left by the 1970s has the oil importing economies reeling with another unexpected oil supply interruption threatening a knockout during the 1980s policies designed to reduce the level of oil imports have been the subject of intensive study but disagreements over their desirability has led to policymaking paralysis on the part of the major oil importing nations these disagreements have often resulted from differing views about how the world oil market works this paper considers a number of oil import reduction measures within a common framework that allows the effects of alternative assumptions about the world oil market to be investigated results from that framework suggest that there are many things that can be done to reduce dependence on oil imports with little cost and significant potential benefits under all but the most pessimistic world oil market assumptions

third world energy policies demand management and conservation increasing energy costs underline the need for more efficient management of energy supply and demand to maintain economic growth especially in the developing countries where resources are scarce combining policy tools for demand management and conservation including pricing physical controls technical methods and education yields the best results pricing policy takes into account the efficiency costs of energy supply required to meet economic objectives this is then adjusted to satisfy other objectives of pricing such as social subsidy considerations financial viability conservation price stability etc energy conservation programmes should be implemented only after determining whether their economic benefits exceed the corresponding costs

redistributive taxation in a simple perfect foresight model abstract we investigate the redistributive potential of capital taxation in an intertemporal maximizing model of capital formation first even unanticipated redistributive capital taxation is severely limited in its effectiveness since it depresses wages second under any convergent redistributive tax policy which maximizes a paretian social objective the capital income tax will converge to zero independent of the factor supply elasticities these results are independent of workers holdings of capital

a three stage theory of international expansion the link between multinationality and performance in the service sector it is generally assumed that the performance of a firm improves with greater multinationality yet recent empirical studies have shown both a u shaped relationship which suggests an initially negative effect of international expansion on performance before the positive returns of international expansion are realized and an inverted u shaped relationship which suggests that international expansion beyond an optimal level is again detrimental to performance and results in a negative slope this paper proposes a new unified three stage theory of international expansion that incorporates both concepts in a sigmoid hypothesis it then tests this on data from 11 service industries highlighting the difference between knowledge based and capital intensive service sectors

education and optimal dynamic taxation the role of income contingent student loans we study the optimal design of integrated education finance and tax systems the distribution of wages is endogenously determined by the costly education decisions of heterogeneous individuals before labor market entry consistent with empirical evidence this human capital investment decision is risky we find that an integrated education and tax system in which the government provides education loans to young individuals coupled with income contingent repayment can always be designed in a pareto optimal way we present a simple empirically driven application of the framework to us data in which individuals make a college entry decision we find the optimal repayment schemes for college loans can be well approximated by a schedule that is linearly increasing in income up to a threshold and constant afterwards so although the full optimum could lead to complicated non linear schedules in theory very simple instruments can replicate it fairly well the welfare gains from income contingent repayment are significant

energy efficiency and economic growth a retrospective cge analysis for canada from 2002 to 2012 abstract the efficiency with which energy is used by firms and households has widespread impacts on economic activity which in turn has implications for environmental quality and energy security using a novel method that could be used for other jurisdictions we estimate the impact of energy efficiency improvements on canadian gdp employment economic structure and welfare from 2002 to 2012 we use a counterfactual back casting method with a sectorally and regionally disaggregated dynamic recursive computable general equilibrium model in effect reverse calibrating the model from observed data to isolate the effects of energy efficiency we estimate that total energy efficiency improvements in canada during this period increased gdp by 2 0 0 19 yr employment by 2 5 0 24 yr and household welfare by about 1 5 0 15 yr additionally energy efficiency improvements reoriented economic structure from capital intense energy supply sectors to relatively labour intense manufacturing and services we find evidence of widespread rebound on an energy expenditure basis across most sectors and backfire where energy efficiency leads to absolute energy use increases in oil sands in situ extraction bitumen upgrading shale gas extraction lime production pulp paper and metal smelting but overall energy use is reduced by energy efficiency improvements over this period

on the consequences of eliminating capital tax differentials in the united states structure and equipment capital are eectively taxed at dierent rates recently president obama joined the group of policy makers and economists who propose to eliminate these dierentials this paper analyzes the consequences of such a reform using an incomplete markets model with equipment skill complementarity we nd that the reform increases average welfare by 0 1 importantly we nd that the reform does not involve the usual eciency vs equality trade o it improves both jel classication e62 h21

does aid matter measuring the effect of student aid on college attendance and completion does student aid increase college attendance or simply subsidize costs for infra marginal students settling the question empirically is a challenge because aid is correlated with many characteristics that influence educational investment decisions a shift in financial aid policy that affects some youth but not others can provide an identifying source of variation in aid in 1982 congress eliminated the social security student benefit program which at its peak provided grants totaling 3 7 billion a year to one out of ten college students using the death of a parent as a proxy for social security beneficiary status i find that offering 1 000 1998 of grant aid increases educational attainment by about 0 16 years and the probability of attending college by four percentage points the elasticities of attendance and completed years of college with respect to schooling costs are 0 7 to 0 8 the evidence suggests that aid has a threshold effect a student who has crossed the hurdle of college entry with the assistance of aid is more likely to continue schooling later in life than one who has never attempted college this is consistent with a model in which there are fixed costs of college entry finally a cost benefit analysis indicates that the aid program examined by this paper was a cost effective use of government resources this abstract was borrowed from another version of this item

exploring the rebound effect from the perspective of household an analysis of china s provincial level abstract the existence of the energy rebound effect may partially even totally offset the expected energy savings in order to explore the status of the household rebound effect in china we manually compiled the provincial energy input output table of china then combining econometric methods input output analysis and the re spending model we conduct a detailed analysis of both the direct and indirect energy rebound effect from the household perspective in china under a unified research framework the results show there are significant differences in risk vulnerability regarding energy rebound effect among different regions qinghai is the most vulnerable province as 69 23 of its economic sectors could lead to a backfire effect two economic sectors have the potential to cause a backfire effect in thirteen provinces in addition the chinese government and its provincial government should take full account of the regional differences when formulating energy policies to alleviate the pressure on energy conservation and carbon emission reduction

taxing capital along the transition not a bad idea after all this paper quantitatively characterizes optimal tax systems in a model of overlapping generations when transitional cohorts are explicitly taken into account we use the recent study of conesa et al 2009 as an example but extend it by transitional dynamics we furthermore develop a general and coherent way of aggregating welfare effects of different individuals and cohorts in the short and long run our welfare measure includes the case of a utilitarian social welfare function yet is not limited to this perspective we show that the optimality of a high capital income tax rate along the transition crucially depends on the assumption of a utilitarian social welfare function this objective of the policy maker comprises implicit redistributive objectives across and within cohorts based on pure economic efficiency and insurance effects however we find a zero capital income tax rate and a less progressive labor income tax schedule to be optimal such a tax system receives political support from initial cohorts a high capital income tax regime on the other hand doesn t

an anatomy of state control in the globalization of state owned enterprises integrating agency theory with institutional analysis in international business we propose a state control perspective to analyze government control mechanisms in emerging economies globalization of state owned enterprises soes we identify two types of state control that influence soes globalization decisions and the degree of globalization dog state ownership control and executives political connections both of which are contingent upon the home country s evolving institutional environments using a two step corporate globalization decision model and 17 272 firm year observations of non financial chinese listed companies we find a strong impact of both types of state control on soes globalization although the impacts differ between the periods before and after domestic governance reform and across different globalization decision steps the diminishing impact of executives political connections and the increasing impact of state ownership control on firms dog demonstrate the evolving relationship between the state and the managers as well as the dynamics of state control in globalizing soes

effective tax rates in macroeconomics cross country estimates of tax rates on factor incomes and consumption abstract this paper proposes a method for computing tax rates using national accounts and revenue statistics using this method we construct time series of tax rates for large industrial countries the method identifies the revenue raised by different taxes at the general government level and defines aggregate measures of the corresponding tax bases this method yields estimates of effective tax rates on factor incomes and consumption consistent with the tax distortions faced by a representative agent in a general equilibrium framework these tax rates compare favorably with existing estimates of marginal tax rates and highlight important international differences in tax policy

keeping it within bounds regression analysis of proportions in international business international business researchers commonly estimate proportions percentages rates or fractions so called proportional dependent variables in this paper we posit that two regression strategies are particularly pertinent to the international business field tobit and fractional regression reviewing recent international business research we find that while fractional regression is rarely used analyses from tobit regression are often incomplete or erroneously interpreted with consequences for the validity of the reported results accordingly we clarify how researchers should choose between tobit and fractional regression and interpret their results we present insights based on simple simulations and data examples with associated stata code and a decision tree for choosing between types of models for use with proportional dependent variables

a new approach to data access and research transparency dart recent debates on transparency and replicability suggest that jibs needs to update its approach on data access and research transparency dart we propose a series of initiatives knowing well that there is a balance to be struck there are clear benefits on the one hand chief among these the potential for learning and knowledge accumulation and equally manifest challenges on the other the imperative to respect privacy confidentiality and intellectual property rights without addressing these challenges will there be the high quality data on which the benefits depend we present access and transparency objectives and set out how an actionable and effective approach towards dart will be implemented but also address ethical legal and organizational challenges of concern to us as a scholarly community

revolving credit lines and targeted search abstract i propose a model of revolving credit lines and targeted search to analyze what accounts for the profitability of the u s credit card industry my analyses lead to two main findings first the search friction has minimal impact on the level of profitability of the credit card industry most of the profitability is a result of the lender choosing the terms of contract second improved information about consumers accounts for the fall in profitability since the 1980s consistent with the data lenders respond to more information by increasing credit card limits and lowering markups

the international entrepreneurial dynamics of accelerated internationalisation the initial stages of internationalisation prior to firms having established their definitive sources of advantage remain the relatively unexplored area of the international business ib literature at these early stages where firms are seeking to establish themselves and new multinational firms are appearing to exploit new opportunities created by globalisation the entrepreneurial aspects of internationalisation come to the fore in this paper we aim to delineate an emerging field of ib scholarship we use the appearance of international new ventures and the phenomenon of accelerated internationalisation that they feature to identify a set of issues that has slipped through the net of some of the existing ib frameworks we propose that the salient features of accelerated and early internationalisation by the newly internationalising firm are best captured in a framework that is found at the intersection of entrepreneurial and internationalisation perspectives which we propose be known as international entrepreneurial dynamics we discuss such a framework in terms of entry points and pathways mapped by firms as they probe the ib arena and the key factors that impinge on behaviour and strategic choices in line with recent developments in the entrepreneurship literature these are grouped into three milestones of entrepreneurial processes that extend across national boundaries 1 the discovery of new opportunities 2 the deployment of resources in the exploitation of these opportunities and 3 the engagement with competitors implications for mne and internationalisation theory are discussed

an evolutionary approach to understanding international business activity the co evolution of mnes and the institutional environment this paper examines the co evolution of mne activities and institutions external and internal to the firm we develop a theoretical framework for this analysis that draws on the more recent writings of douglass north on institutions as a response to complex forms of uncertainty associated with the rise in global economic interconnectedness and of richard nelson on the co evolution of technology and institutions we link historical changes in the character of mne activities to changes in the institutional environment and highlight the scope for firm level creativity and institutional entrepreneurship that may lead to co evolution with the environment we argue that the main drivers for institutional entrepreneurship are now found in the increasing autonomy of mne subsidiaries thus mne agency derives from more decentralized forms of experimentation in international corporate networks which competence creating nodes of new initiatives can co evolve with local institutions unlike most other streams of related literature our approach connects patterns of institutional change in wider business systems with more micro processes of variety generation and experimentation within and across individual firms this form of co evolutionary analysis is increasingly important to understanding the interrelationships between mne activities and public policy

varieties of capitalism and the internationalization of state owned enterprises this article sheds light on how the internationalization of state owned enterprises is influenced by the state involvement in ownership and by the home country s institutional settings integrating international business literature with the debate on the varieties of capitalism we contend that state dominated enterprises internationalize more less than privately owned enterprises in coordinated liberal market economies whereas they exhibit an inconstant behavior in state influenced market economies our analysis on a sample of enterprises pertaining to 20 oecd countries supports our hypotheses this article adds to studies on the influence of institutions on firms internationalization and has implications for both managers and policymakers

state ownership effect on firms fdi ownership decisions under institutional pressure a study of chinese outward investing firms this study investigates the effect of state ownership on chinese firms foreign direct investment fdi ownership decisions it adopts a political perspective to extend the application of institutional theory in international business research specifically it examines firms heterogeneous responses to external institutional processes during foreign market entry while taking into consideration the political affiliation of firms with the external institutions we argue that state ownership creates the political affiliation of a firm with its home country government which increases the firm s resource dependence on home country institutions while at the same time influencing its image as perceived by host country institutional constituents such resource dependence and political perception increase firms tendency to conform to rather than resist isomorphic institutional pressures we tested our hypotheses using primary data for 132 fdi entries made by chinese firms during 2000 2006 and we found that the effects of home regulatory host regulatory and host normative pressures on a firm to choose a joint ownership structure were stronger when the share of equity held by state entities in the firm was high

how should tax progressivity respond to rising income inequality we address this question in a heterogeneous agent incomplete markets model featuring exogenous idiosyncratic risk endogenous skill investment and flexible labor supply the tax and transfer schedule is restricted to be log linear in income a good description of the us system rising inequality is modeled as a combination of skill biased technical change and growth in residual wage dispersion when facing shifts in the income distribution like those observed in the us a utilitarian planner chooses higher progressivity in response to larger residual inequality but lower progressivity in response to widening skill price dispersion reflecting technical change overall optimal progressivity is approximately unchanged between 1980 and 2016 we document that the progressivity of the actual us tax and transfer system has similarly changed little since 1980 in line with the model prescription

optimal timing of college subsidies enrollment graduation and the skill premium abstract the large increase in the skill premium has led many policy makers to propose increasing college subsidies as a strategy to increase college enrollment and reduce inequality existing analyses typically assume that there is no distinction between enrollment and graduation but in fact more than 50 of college enrollees do not graduate this highlights the need to explicitly model the decision to drop out in assessing the effect of subsidies i build a general equilibrium model of education choice that features an explicit dropout decision calibrate it to match key features of the us economy and use it to evaluate the impact of college subsidies on the supply of college educated labor i show that moving to a system in which subsidies are back loaded i e higher for juniors and seniors than for freshmen and sophomores will increase the supply of college educated labor even holding total subsides constant in fact this effect is larger than what would be accomplished by a uniform 50 increase in subsidies

negative rebound and disinvestment effects in response to an improvement in energy efficiency in the uk economy this paper uses a computable general equilibrium cge framework to investigate the conditions under which rebound effects may occur in response to increases in energy efficiency in the uk national economy previous work for the uk has suggested that rebound effects will occur even where key elasticities of substitution in production are set close to zero the research reported in this paper involves carrying out a systematic sensitivity analysis where relative price sensitivity is gradually introduced into the system focusing specifically on elasticities of substitution in production and trade parameters in order to determine conditions under which rebound effects become a likely outcome the main result is that while there is positive pressure for rebound effects even where direct and indirect demands for energy are very price inelastic this may be partially or wholly offset by negative income competitiveness and disinvestment effects which also occur in response to falling energy prices the occurrence of disinvestment effects is of particular interest these occur where falling energy prices reduce profitability in domestic energy supply sectors leading to a contraction in capital stock in these sectors which may in turn lead to rebound effects that are smaller in the long run than in the short run a result that runs contrary to the predictions of previous theoretical work in this area

improved energy efficiency in the industrialized countries past achievements co2 emission prospects abstract this paper explores the contribution which energy efficiency might make to future reductions in co 2 emissions trends in key energy use sectors and recent changes that may signal a slowdown in the rate of improvement of energy efficiency are examined the oecd countries reduced their energy use through greater efficiency by nearly 32 ej or 16 million bbl day oil equivalent between 1972 and 1985 but the pace of these improvements in energy use has begun to slow prospects for increased efficiency in each sector and the barriers to achieving those increases are discussed

accounting for the changing role of family income in determining college entry in this paper i analyze the determinants of college enrolment and the changes in these determinants over time i propose a quantitative life cycle model with college enrolment altruistic parents provide financial support to their children using counterfactual experiments i find that 24 percent of all households are financially constrained in their college decision constraints become more severe over time i show that my model is consistent with a narrow college enrolment gap between students from rich and poor families as previously reported in the empirical literature the estimation of enrolment gaps is a popular reduced form approach for measuring the fraction of constrained households my results suggest that these reduced form estimates are misleading and that a structural model of parental transfers is needed to correctly identify constrained households further i show that parental transfers are an important driver behind the changing role of family income as a determinant of college entry a fact that is well documented for the us economy

rebound effect of improved energy efficiency for different energy types a general equilibrium analysis for china abstract this paper explores the rebound effect of different energy types in china based on a static computable general equilibrium model a one off 5 energy efficiency improvement is imposed on five different types of energy respectively in all the 135 production sectors in china the rebound effect is measured both on the production level and on the economy wide level for each type of energy the results show that improving energy efficiency of using electricity has the largest positive impact on gdp among the five energy types inter fuel substitutability does not affect the macroeconomic results significantly but long run impact is usually greater than the short run impact for the exports oriented sectors those that are capital intensive get big negative shock in the short run while those that are labour intensive get hurt in the long run there is no backfire effect however improving efficiency of using electricity can cause negative rebound which implies that improving the energy efficiency of using electricity might be a good policy choice under china s current energy structure in general macro level rebound is larger than production level rebound primary energy goods show larger rebound effect than secondary energy goods in addition the paper points out that the policy makers in china should look at the rebound effect in the long term rather than in the short term the energy efficiency policy would be a good and effective policy choice for energy conservation in china when it still has small inter fuel substitution

who gets what the mne the national state and the distributional effects of globalization globalization is the outcome of the interface between national states and mnes it is a negotiated solution rather than perfect market equilibrium even in a global liberalized world national states are trying to generate as much welfare for their residents as they can while mnes try to maximize their value this creates a bargaining situation a stylized game theory model is presented and discussed in order to gain insights into the income distributional effects of the globalization process two important features of the model are a that there is a need for a carefully spelt out strategy and b that optimal solutions depend on an ability to identify the elements of the bargaining where the opportunity cost is low a case study of the negotiation between the state of israel and intel is presented as an illustration for this general model

host country headquarters and an mne s subsequent within country diversifications we propose that the establishment of a host country headquarters hchq in a large emerging market can be viewed as part of a multinational enterprise s mne political strategy to facilitate its within country diversifications by reducing institutional intervention of the host government using a sample of mnes in china in the period 1979 2005 we find that mnes with an hchq had a greater number of subsequent diversifications in china as compared with those mnes without an hchq this effect was more prominent when the diversifications were in domains with a higher level of institutional intervention

the proof of the pudding making energy efficiency work abstract if western industrialized market economies are to realize a substantial proportion of the potential benefits of increased energy efficiency there is a need to move beyond engineering and economic estimates of efficiency potential and to consider seriously the implications of the behavioural and programme evaluation literature on energy efficiency that literature suggests that reliance upon market mechanisms alone will not permit realization of economically efficient levels of energy efficiency however if points the way toward designing energy efficiency programmes that show real promise of significantly achieving their potential in industrialized market economies

on the optimality of age dependent taxes and the progressive u s tax system abstract in life cycle economies where an individual s optimal consumption work plan is almost never constant the optimal marginal tax rates on capital and labor income vary with age conversely the progressivity imbedded in the u s tax code implies that marginal tax rates vary with age because tax rates vary with earnings and earnings vary with age using numerical simulations this paper shows that if the tax authority is prevented from conditioning tax rates on age some degree of progressivity is desirable as progressive taxation better imitates optimal age dependent taxes than an optimal age independent tax system this role for progressive taxation emanates from efficiency reasons and does not rely on any insurance nor re distribution arguments

on the optimal provision of social insurance progressive taxation versus education subsidies in general equilibrium in this paper we compute the optimal tax and education policy transition in an economy where progressive taxes provide social insurance against idiosyncratic wage risk but distort the education decision of households optimally chosen tertiary education subsidies mitigate these distortions we highlight the quantitative importance of general equilibrium feedback effects from policies to relative wages of skilled and unskilled workers subsidizing higher education increases the share of workers with a college degree thereby reducing the college wage premium which has important redistributive benefits we also argue that a full characterization of the transition path is crucial for policy evaluation we find that optimal education policies are always characterized by generous tuition subsidies but the optimal degree of income tax progressivity depends crucially on whether transitional costs of policies are explicitly taken into account and how strongly the college premium responds to policy changes in general equilibrium

diplomatic and corporate networks bridges to foreign locations firms and governments operate in broad networks in which the home government and its diplomatic service are a critical node or a referral point between firms and potential partners in foreign locations thus diplomatic relations between countries matter for the choice of foreign investment location using a network perspective we argue that the extent to which good diplomatic relations induce firms to invest in friendly host countries depends on their political connections to home governments those with stronger ties to home governments can better access and leverage intergovernmental diplomatic connections thus benefiting potentially from enhanced access to information reduced political risks and increased legitimacy such ability of politically connected firms is more useful where weak institutional impartiality in the host country inhibits neutral treatment of foreign investors empirically using overseas investment location decisions by chinese firms we find that the types of home government ties i e whether they are organizational or personal and whether those relationships are with central or local goverments and the impartiality of host institutions are both important contingencies affecting firms utilization of diplomatic relations we discuss the implications of our study to research on network theory political ties and internationalization of emerging market firms

tax and education policy in a heterogeneous agent economy what levels of redistribution maximize growth and efficiency this paper studies the effects of progressive income taxes and education finance in a dynamic heterogeneous agent economy such redistributive policies entail distortions to labor supply and savings but also serve as partial substitutes for missing credit and insurance markets the resulting tradeoffs for growth and efficiency are explored both theoretically and quantitatively in a model that yields complete analytical solutions progressive education finance always leads to higher income growth than taxes and transfers but at the cost of lower insurance overall efficiency is assessed using a new measure that properly reflects aggregate resources and idiosyncratic risks but unlike a standard social welfare function does not reward equality per se simulations using empirical parameter estimates show that the efficiency costs and benefits of redistribution are generally of the same order of magnitude resulting in plausible values for the optimal rates aggregate income and aggregate welfare provide only crude lower and upper bounds around the true efficiency tradeoff

modern macroeconomics in practice how theory is shaping policy over the last three decades macroeconomic theory and the practice of macroeconomics by economists have changed significantly for the better macroeconomics is now firmly grounded in the principles of economic theory we focus on the role of economic theory in shaping policy over the last several decades the united states and other countries have undertaken a variety of policy changes that are precisely what macroeconomic theory of the last 30 years suggests the evidence that theoretical advances have had a significant effect on the practice of policy is often hard to see for policymakers and advisers involved in the hurly burly of day to day policymaking but easy to see if one steps back and takes a longer term perspective examples of the effects of theory on the practice of policy include increased central bank independence adoption of inflation targeting and other rules to guide monetary policy increased reliance on consumption and labor taxes instead of capital income taxes and increased awareness of the costs of policies that distort labor markets

redistributive taxation in the roy model we consider optimal redistribution in a model where individuals can self select into one of several possible sectors based on heterogeneity in a multidimensional skill vector we show that when the government does not observe the sectoral choice or underlying skills of its citizens the constrained pareto frontier can be implemented with a single non linear income tax we derive formulas for this optimal tax schedule if sectoral inputs are complements a many sector model with self selection leads to optimal income taxes that are less progressive than the corresponding taxes in a standard single sector model under natural conditions however they are more progressive than in a multi sector model without occupational choice or without overlapping wage distributions as in stiglitz 1982

taxing top earners a human capital perspective we assess the consequences of substantially increasing the marginal tax rate on u s top earners using a human capital model we nd that 1 the peak of the model laer curve occurs at a 52 percent top tax rate 2 if human capital were exogenous then the top of the laer curve would occur at a 66 percent top tax rate and 3 applying the theory and methods that diamond and saez 2011 use to provide quantitative guidance for setting the top tax rate to model data produces a tax rate that substantially exceeds 52 percent

optimal taxation in a life cycle model we extend deaton s atemporal optimal commodity tax model to a life cycle envi ronment in which the individual may choose to work in many periods we are able to con firm the corlett hague intuition goods that are more complementary with leisure should be taxed at higher rates in addition we prove that in the microeconomic framework under lying some popular general equilibrium models if real wage and interest rates are constant over the life cycle the addition of some interest taxation to a consumption tax regime would be welfare improving and that optimal labour tax rates decline with age

an empirical examination of the form of the relationship between multinationality and performance this paper reports findings from a study that systematically evaluated the form of the relationship between multinationality and performance in contrast to most of the prior conceptualizations that rely on linear monotonic models of the linkage this study examined a curvilinear model that addresses both the costs and benefits associated with multinationality it used time series techniques to capture both the static and dynamic components of the relationship results show that increasing levels of multinationality bring significant performance benefits up to a certain optimum level beyond which benefits begin to decelerate while costs accelerate

partial privatization and firm performance most privatization programs begin with a period of partial privatization in which only non controlling shares of firms are sold on the stock market since management control is not transferred to private owners it is widely contended that partial privatization has little impact this perspective ignores the role that the stock market can play in monitoring and rewarding managerial performance even when the government remains the controlling owner using data on indian state owned enterprises we find that partial privatization has a positive impact on profitability productivity and investment widespread privatization in recent decades has generated a large empirical literature concerning the effect of ownership on firm performance most studies find that privatization has a positive impact on the profitability and efficiency of firms see megginson and netter 2001 for a recent survey 1 the firms in these studies have had a majority of their assets privatized and control rights have been transferred from the government to private owners surprisingly little is known about the effect of partial privatization where the government remains the controlling owner this paper seeks to address this gap in the literature by investigating whether the performance of state owned enterprises in india is affected by the sale of non controlling equity stakes on the stock market

adapting and sustaining operations in weak institutional environments a business ecosystem assessment of a chinese mne in central africa multinational enterprises mnes sometimes pursue opportunities in largely uncharted distinctive institutional environments how do these firms sustain operations in such settings we explore how mnes tailor and maintain operations in institutionally weak precarious and challenging host country environments such as those devastated by conflicts we draw on the business ecosystem framework and analyze a qualitative longitudinal case study of a chinese state owned mne that entered and developed its operations in the democratic republic of congo drc in central africa our findings indicate that after entry the mne sustained its operations in the drc by engaging in collective actions and coevolving with key stakeholders within its business ecosystem these stakeholders included the home and host governments state owned enterprises privately owned enterprises and local communities our qualitative data further suggest that the mne s business ecosystem evolved through three stages exploring establishing and embedding and that within this ecosystem the key stakeholders also coevolved with the mne by adopting new roles over time

tax policy and human capital formation missing from recent discussions of tax reform is any systematic analysis of the effects of various tax proposals on skill formation this gap in the literature in empirical public finance is due to the absence of any empirically based general equilibrium models with both human capital formation and physical capital formation that are consistent with observations on modern labor markets this paper is a progress report on our ongoing research on formulating and estimating dynamic general equilibrium models with endogenous heterogeneous human capital accumulation our model explains many features of rising wage inequality in the u s economy james heckman lance lochner and christopher taber 1998 in this paper we use our model to study the impacts on skill formation of proposals to switch from progressive taxes to flat income and consumption taxes for the sake of brevity we focus on steady states in this paper although we study both transitions and steady states in our research this abstract was borrowed from another version of this item

state governance and technological innovation in emerging economies state owned enterprise restructuration and institutional logic dissonance in china s high speed train sector can state governance spur firm innovation in an emerging economy and transform state owned enterprises soes from dying dinosaurs to dynamic dynamos we seek an answer to this question by investigating the innovative performance of restructured soes in china s high speed train sector we expect that soe restructuration will improve firm innovation but that the degree of improvement will depend on how the state conducts firm governance building on institutional theory we distinguish state governance via equity ownership and administrative affiliation in an emerging economy with market hierarchy institutional conflicts under such conflicts restructured soes experience institutional logic dissonance which hinders organizational change for technological innovation we hypothesize that state ownership exacerbates institutional logic dissonance at a restructured soe thus limiting innovation improvement from restructuration in contrast state affiliation mitigates firm dissonance and hence augments such improvement we find empirical evidence for these hypotheses in a comprehensive panel of high speed train manufacturers in china between 1989 and 2015 this study contributes to the institution based theory of technological innovation in emerging economies on the practical front our findings suggest that emerging states may adopt arms length governance to spur soe innovation and unleash these dynamic dynamos to fuel sustainable economic growth

economy wide rebound effects for non energetic raw materials material efficiency is increasingly being seen as a means to save resources and achieve greater security of supply whether these aims can be achieved to the desired extent depends among other things on the presence of rebound effects this article estimates economy wide rebound effects for non energetic raw materials in the context of a set of material efficiency projects carried out in germany under the assumption that the efficiency technologies developed in these projects are scaled up to the national level input output analysis is used to calculate changed material requirements and corresponding rebound effects reduced material flows in monetary terms together with economic data are aggregated to an economy wide impulse which can cause re increases in the demand for the considered raw materials depending on the project specific framework conditions and subject to the modeling assumptions our estimates suggest that individual materials display a wide range of rebound effects ranging from close to zero to low double digit percentages these results point towards the conclusion that economy wide rebound effects do not make these efficiency measures obsolete however they also suggest that rebound effects should not be ignored in the assessment of the role of efficiency in future resource consumption

rebound and disinvestment effects in refined oil consumption and supply resulting from an increase in energy efficiency in the scottish commercial transport sector in this paper we use an energy economy environment computable general equilibrium cge model of the scottish economy to examine the impacts of an exogenous increase in energy augmenting technological progress in the domestic commercial transport sector on the supply and use of energy we focus our analysis on scottish refined oil as the main type of energy input used in commercial transport activity we find that a 5 increase in energy efficiency in the commercial transport sector leads to rebound effects in the use of oil based energy commodities in all time periods in the target sector and at the economy wide level however our results also suggest that such an efficiency improvement may cause a contraction in capacity in the scottish refined oil supply sector this disinvestment effect acts as a constraint on the size of rebound effects however the magnitude of rebound effects and presence of the disinvestment effect in the simulations conducted here are sensitive to the specification of key elasticities of substitution in the nested production function for the target sector particularly the substitutability of energy for non energy intermediate inputs to production

restructuring of firms in transition ownership institutions and openness to trade we develop a theoretical framework for defensive and strategic restructuring and provide estimates of restructuring in privatized firms in an advanced transition economy slovenia our rich data point to both types of restructuring as well credit rationing and bargaining with respect to investment privatized firms display profit maximizing behavior and a firm s export orientation and institutional features such as insider vs outsider privatization employee ownership and employee control do not affect the firm s employment and investment behavior the results suggest that a major exposure to world competition induces similar economic behavior in firms with different structural and institutional characteristics

optimal taxation of capital income in general equilibrium with infinite lives this paper analyzes the optimal tax on capital income in general equilibrium models of the second best agents have infinite lives and utility functions which are extensions from the koopmans form the population is heterogeneous the important property of the models is the equality between the social and the private discount rates in the long run i find that the optimal tax rate is zero in the long run for a special case of additively separable utility functions i then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state

the risk free rate in heterogeneous agent incomplete insurance economies abstract why has the average real risk free interest rate been less than one percent the question is motivated by the failure of a class of calibrated representative agent economies to explain the average return to equity and risk free debt i construct an economy where agents experience uninsurable idiosyncratic endowment shocks and smooth consumption by holding a risk free asset i calibrate the economy and characterize equilibria computationally with a borrowing constraint of one year s income the resulting risk free rate is more than one percent below the rate in the comparable representative agent economy

redistribution and education subsidies are siamese twins abstract we develop models of optimal linear and non linear income taxation with endogenous human capital formation to explore optimal education subsidies optimal subsidies on education ensure efficiency in human capital accumulation and thus play an important role in alleviating the tax distortions on learning induced by redistributive policies if the government cannot verify all investments in human capital education policy offsets some but not all tax induced distortions on learning non pecuniary educational costs benefits may increase decrease subsidies on education especially if they are complementary to work effort

optimal human capital policies abstract we analyze optimal income taxes and optimal schooling subsidies in a dynamic private information economy with observable human capital accumulation we show that under plausible conditions the marginal schooling subsidies are positive and that they are zero at both endpoints of the skill distribution we compute the optimal policies and evaluate their impact over the transition and at the steady state we find that the optimal schooling policies are significantly smaller than the optimal marginal income taxes if optimal schooling policies are introduced jointly with optimal income taxes then their welfare and aggregate effects are small however if income taxes are not set optimally then the optimal schooling policies have significant welfare and aggregate effects

intergenerational transfers and the accumulation of wealth h t ouseholds acquire wealth from two sources they save out of income they have earned and they receive transfers from other people the first method of wealth accumulation goes under the name of life cycle saving in which people save during their working lives and dissave after retirement the second involves either an inter vivos transfer that is a transfer between living people or a bequest a transfer that occurs at the death of the donor while inter vivos transfers and bequests will arise in dynastic models where preferences include a taste for the well being of one s descendents few empirical life cycle models reflect these concerns indeed a sharp debate has arisen over the ability of the simple life cycle model to explain observed wealth accumulation understanding the relative sizes of these sources of wealth accumulation affects a variety of issues for example the effects of government debt social insurance public transfer programs estate taxes and incentives for charitable giving depend to some extent on the magnitude and nature of private saving and transfers of wealth analyses of the inequality of wealth may depend on whether most of wealth is earned or received as transfers appropriate policies for encouraging private saving may look rather different depending on whether most saving is to be consumed later in life or passed along to the next generation finally evidence on transfer patterns relates to more fundamental

what we talk about when we talk about global mindset managerial cognition in multinational corporations recent developments in the global economy and in multinational corporations have placed significant emphasis on the cognitive orientations of managers giving rise to a number of concepts such as global mindset that are presumed to be associated with the effective management of multinational corporations this paper reviews the literature on global mindset and clarifies some of the conceptual confusion surrounding the construct we identify common themes across writers suggesting that the majority of studies fall into one of three research perspectives cultural strategic and multidimensional we also identify two constructs from the social sciences cosmopolitanism and cognitive complexity that underlie the perspectives found in the literature we then use these two constructs to develop an integrative theoretical framework of global mindset we then provide a critical assessment of the field of global mindset and suggest directions for future theoretical and empirical research

immigration and inequality immigration is often viewed as a proximate cause of the rising wage gap between highand low skilled workers nevertheless there is controversy over the appropriate theoretical and empirical framework for measuring the presumed effect and over the precise magnitudes involved this paper offers an overview and synthesis of existing knowledge on the relationship between immigration and inequality focusing on evidence from cross city comparisons in the u s while some researchers have claimed that a cross city research design is inherently flawed i argue that the evidence from cross city comparisons is remarkably consistent with recent findings based on aggregate time series data in particular cross city and aggregate time series comparisons provide support for three key conclusions 1 workers with below high school education are perfect substitutes for those with a high school education 2 high school equivalent and college equivalent workers are imperfect substitutes with an elasticity of substitution on the order of 2 3 within education groups immigrants and natives are imperfect substitutes together these results imply that the average impacts of recent immigrant inflows on the relative wages of u s natives are small the effects on overall wage inequality including natives and immigrants are larger reflecting the concentration of immigrants in the tails of the skill distribution and higher residual inequality among immigrants than natives even so immigration accounts for a small share 5 of the increase in u s wage inequality between 1980 and 2000

generalized social marginal welfare weights for optimal tax theory this paper proposes to evaluate tax reforms by aggregating money metric losses and gains of different individuals using generalized social marginal welfare weights optimum tax formulas take the same form as standard welfarist tax formulas by simply substitut ing standard marginal social welfare weights with those generalized weights weights directly capture society s concerns for fairness without being necessarily tied to individual utilities suitable weights can help reconcile discrepancies between the welfarist approach and actual tax practice as well as unify in an operational way the most prominent alternatives to utilitarianism such as libertarianism equality of opportunity or poverty alleviation jel d60 d63 h21 h23 i38

self selection and pareto efficient taxation abstract this paper analyses the set of pareto efficient tax structures the formulation of the problem as one of self selection not only shows more clearly the similarity between this problem and a number of other problems such as the optimal pricing of a monopolist which have recently been the subject of extensive research but also allows the derivation of a number of new results we establish i under fairly weak conditions randomization of tax structures is desirable ii if different individuals are not perfect substitutes for one another in production then the general equilibrium effects until now largely ignored in the literature of changes in the tax structure may be dominant in determining the optimal tax structure in particular if the relative wage of high ability and low ability individuals depends on the relative supplies of labor the optimal tax structure entails a negative marginal tax rate on the high ability individuals and a positive marginal tax rate on the low ability individuals the marnitude of which depends on the elasticity of substitution iii if individuals differ in their preferences pareto efficient taxation may entail negative marginal tax rates for high incomes while iv if wage income is stochastic the marginal tax rate at the upper end may be 100 our analysis thus makes clear that the main qualitative properties of the optimal tax structure to which earlier studies called attention are not robust to these attempts to make the theory more realistic