Ph.D. Candidate, University of Minnesota
Research Analyst, Federal Reserve Bank of Minneapolis
Quantifying the Welfare Gains From Flexible Dynamic Income Tax Systems (Job Market Paper), November 2009
Abstract: This paper sets up an overlapping generations general equilibrium model with incomplete markets similar to Conesa, Kitao, and Krueger's (2009) and uses it to simulate a policy reform which replaces an optimal flat tax with an optimal non-linear tax that is allowed to be arbitrarily age and history dependent. The reform shifts labor supply toward productive households and thereby increases aggregate productivity. This leads to higher per capita consumption and shorter per capita hours. Under a utilitarian social welfare function that places equal weight on all current and future cohorts, the implied welfare gain is worth more than 10% in lifetime consumption equivalents.
Computing Dynamic Optimal Mechanisms When Hidden Types Are Markov (with Y. Waki), October 2009
Abstract: We consider a canonical dynamic mechanism design problem in which the agent's hidden type follows a Markov chain with a potentially large state space. We first show how the problem can be solved numerically with moderate costs when the Markov chain belongs to a special class we identify, and then argue that this class is flexible enough for the method to be useful in quantitative applications.