Luca Spataro

TAXING CAPITAL INCOME AS PIGOUVIAN CORRECTION: THE ROLE OF DISCOUNTING THE FUTURE

In this work, we find that the zero capital income tax result might not hold, even at the steady state, when the government discount rate differs from the individual one. As intuitive Pigouvian considerations would suggest, capital income should be taxed (subsidized) when the government is less (more) impatient than individuals are. However, a counterintuitive asymmetry emerges as for the steady state since, in the long run, capital income cannot be taxed because of the explosive distortionary effect of positive taxes. The asymmetry is ruled out with a logarithmic utility function because, in this case, the anticipated policy path does not affect current individual choices and thus the cumulative distortionary effect of taxes disappears.

THE EFFECTS OF PENSION FUNDS ON MARKETS PERFORMANCE: A REVIEW

The worldwide reforming process of pension systems triggered by the demographic transition and globalization has led several countries to implement multi‐pillar pension systems and enhance pension funds. For this reason the studies on the effects that pension funds exert on markets performance have been flourishing in the last decades. In this paper, we provide an updated review of the empirical advances in this field of study, with particular focus on the effects that pension funds produce on labour markets, financial markets and economic growth.

The Optimal Level of Debt in an OLG Model with Endogenous Fertility

Abstract In the present work we extend Diamond’s OLG model by allowing for endogenous fertility and look at the consequences of such an extension on the rules for optimal public debt issuing. In particular, we show that the condition according to which the rate of growth of population should be higher than the interest rate is no longer sufficient for obtaining welfare improvements via debt increases and that the level of optimal debt is, ceteris paribus, lower than the one arising with exogenous fertility. Finally, a sensitivity analysis shows that the optimal level of debt is higher the lower the capital share, the higher individuals’ degree of patience, the bigger the child-rearing cost and the lower the preference for children. On policy grounds we argue that debt-tightening policies may be optimal in the long run provided that the cost of rearing children does not increase (or, if anything, does decrease).

Endogenous Financial Literacy, Saving, and Stock Market Participation

There is a consolidated empirical literature providing evidence of the fact that financial literacy, human capital, savings and stock market participation are interconnected decisions. However, to the best of our knowledge, a theoretical explanation of such connections is missing. In this paper we aim at filling this gap, by building a framework that includes all these decisions in an encompassing model. The results of our model provide a theoretical foundation for the role and the determinants of financial literacy and are able to explain several stylized facts on literacy and stock market participation.

Recent Advances in Micromodeling: The Choice of Retiring

Recently, much attention has been devoted to econometric models as a new tool for dynamic microsimulation. In particular, microeconometric approaches to retirement decisions have been increasingly adopted for “calibrating” dynamic microsimulation frameworks aiming at endogenizing retirement choices. By doing this, both the understandment and the prediction of the effects of policy reforms (for istance, of Social Security systems) can be significantly improved. In this work an overview of the most recent developments in micromodeling retirement decisions is carried out. In particular, as for the choice of the estimation strategy, special emphasis is posed on the trade-off between the degree of realism of hypotheses, on the one hand, and on data tractability and/or estimation performance, on the other hand. Finally, some issues which represent a challenging avenue for future research are discussed.

Correcting Dynamic Inefficiency when Labor Supply is Endogenous: A Steady State Analysis

In this paper I show that, when endogenous labor supply is considered, dynamic inefficiency of Overlapping Generation economies can be neither necessary nor sufficient for debt issuing to generate a steady state welfare improvement, even in the absence of distortionary taxes.

Rate of Growth of Population and Aggregate Saving in the Basic Life-Cycle Model

In this paper we explore the impact of the life-cycle dynamics of family composition on the aggregate propensity to save and on the relationship between the latter and the rate of growth of population, in the hypothesis of life-cycle behaviour. We depart from Modigliani-Brumbergs basic model by assuming that the household, rather than the individual, is the relevant economic unit. In this framework we point out that in an economy with a steadily growing population the aggregate propensity to save is a function of several demographic parameters and, in particular, of the timing of births (T) and of the number of children generated by each household (f). We then explore the impact of T and f on the co-movements of the rate of growth of population and of the aggregate propensity to save. We show that, when the change of the rate of growth of population is brought about by a change of the number of children generated by each household, the aggregate propensity to save and the rate of growth of population move in the same direction, as suggested by Modigliani-Brumberg, unless the timing of births is very low and the number of children generated by each household relatively high. On the contrary, when the rate of growth of population changes because the timing of birth changes, the aggregate propensity to save and the rate of growth of population move in opposite directions unless the number of children generated by each household is very close to two and therefore the rate of growth of population very close to zero.

Economic Growth and Poverty Traps: a Simple Geometry of Intergenerational Transfers

Innovation, Unemployment and Policy in the Theories of Growth and Distribution increases our understanding about the more relevant economic determinants and policy aspects of the interdependence between economic growth and income distribution.