41 votes
Accepted

Is a universal basic income possible in the United States?

This is a good question. To be concrete, I think it's easier to pick a single number - this is arbitrary, but I'll go with the figure of $10,000 offered in the proposal by Charles Murray (one of the ...
user avatar
20 votes
Accepted

What benefits do governments receive from not eliminating debt?

Most of the same considerations apply to countries as apply to businesses and people, plus a couple of extra cons Pros of Being Debt Free No interest payments Not beholden to someone else (financial ...
user avatar
  • 1,428
13 votes

Unemployment and the Minimum Wage---what are the main counter-arguments to Card and Krueger?

Isaac Sorkin, a grad student at Michigan, has addressed this. Here is Miles Kimball blogging it, Isaac Sorkin: Don't Be Too Reassured by Small Short-Run Effects of the Minimum Wage, Jonathan Meer and ...
user avatar
  • 2,167
11 votes

Why is capital income taxed differently than wage income?

One reason is the inflationary gain problem. Let me give an example with simple numbers. I make \$100 in income and pay 20% tax of \$20. I have \$80 left, which I invest in a stock. The stock goes ...
user avatar
  • 1,152
10 votes

What benefits do governments receive from not eliminating debt?

There is an interesting report that circulated during the Clinton administration, when we predicted we'd pay off all the debt, that I think answers your question. (here's a public radio article about ...
user avatar
10 votes

Unemployment and the Minimum Wage---what are the main counter-arguments to Card and Krueger?

To the extent that there is an economic explanation for their findings, it's something along the lines of costs of changing prices and employment are large enough relative to the increase in the ...
user avatar
  • 2,006
8 votes
Accepted

Economic policies to decrease obesity (would they be effective?)

Yes, sugar tax! This is probably as controversial as tobacco tax was back in the days. If you walk through a supermarket, you will find that half of the food section is food full of sugar. Sugar is ...
user avatar
8 votes
Accepted

Simple Sketch of Mirrlees 1971

You can find a didactic exposition of Mirrlees (1971) -- including derivations of optimal tax schedule formulas for different social welfare and utility function -- in section 4.2 of "The Economics of ...
user avatar
8 votes
Accepted

Are the figures quoted in this liblabcon's blog post accurate? (topic: UK banks)

Source:- Bankers cost this country £456.3bn in fraud In the UK, where the government bailed out Royal Bank of Scotland Group Plc (RBS) and Lloyds Banking Group, the total outstanding support ...
user avatar
  • 196
8 votes
Accepted

Is climate change an economic question?

Climate change in itself, its measurement and the fact that it is happening, and modeling its speed or trying to discover its causes (e.g., carbon emissions, methane emissions and so on) is not an ...
user avatar
  • 43.5k
7 votes

Unemployment and the Minimum Wage---what are the main counter-arguments to Card and Krueger?

First, we need to assume that the minimum wage is an "effective constraint", i.e. that in the cases examined people are paid the minimum wage. I guess this holds. Second, the negative relation ...
user avatar
7 votes

Is my logic on taxation for this question legit?

The burden of taxation is shared among suppliers and demanders according to the price elasticities of supply and demand. The more elastic side carries less of the tax burden. To understand this, note ...
user avatar
  • 5,434
6 votes

What benefits do governments receive from not eliminating debt?

Suppose your country holds debt equal to thirty percent of GDP and that the government is obliged to pay interest of five percent per year on that debt. This implies that each year the cost of ...
user avatar
  • 16.6k
6 votes

Policy relevance of the optimal taxation given uncertainty about social welfare specification

Here is an answer based on the following interpretation of the SWF : there is no "true" SWF, but SWFs are observable in principle, they simply represent the preferences of the policy decision maker. ...
user avatar
6 votes

Economic policies to decrease obesity (would they be effective?)

Pierre Dubois, Rachel Griffith, and Aviv Nevo have a nice and well-executed AER paper where they argue that differences in obesity rates across countries can be due to differences in food consumption ...
user avatar
  • 6,652
6 votes

Economic policies to decrease obesity (would they be effective?)

In any discussion of obesity-related policy, it helps to call out a couple of assumptions: Assumption: A healthy lifestyle will reduce a person's weight. Everyone and their brother "knows" this to ...
user avatar
  • 61
6 votes
Accepted

Minimum wage vs wage subsdies

We could distinguish between two kinds of "wage subsidies": A) The government pays to the firm part of the wage cost, usually social security fees. B) The government pays to the employee a markup ...
user avatar
6 votes
Accepted

What are some good advanced level textbooks on public economics?

The best book in my opinion for your case is definitely Intermediate Public Economics by Jean Hindriks and Gareth D. Myles. It is often used as a standard text for public finance at your level and ...
user avatar
  • 5,434
6 votes

Why is the USA not capable to pay its debt?

The US is in a privileged position of producing a currency that people in other countries want to use (as reserve). There's even a French name for that. Anyway, a result of that is cheap credit for ...
user avatar
  • 3,728
5 votes

Is a universal basic income possible in the United States?

A new report by the Roosevelt Institute answers exactly that using a Keynesian, Stock-Flow-Consistent model calibrated to the US. According to their result, when distributional changes are considered, ...
user avatar
  • 8,477
5 votes

Unemployment and the Minimum Wage---what are the main counter-arguments to Card and Krueger?

No one else has mentioned another possible explanation: that there was an increasing labor shortage in New Jersey at the time of the minimum wage increase. This caused minimum wage employment to ...
user avatar
  • 1,152
5 votes
Accepted

Do countries invest in the country's own stock market?

One example of monetary policy is the Bank of Japan buying the Nikkei as part of its asset purchasing program. Typically, a substantial share of citizens' wealth is connected to returns of their ...
user avatar
  • 714
5 votes

Why don't public transport networks have more routes to each terminal in order to reduce the number of transfers?

The people who do the planning do explicitly account for the value of time and convenience to transit users. At least, in all the systems I've worked on. (source: I have had jobs where I worked on ...
user avatar
  • 8,012
5 votes
Accepted

Nash equilibrium - mistake in proof of paper?

The objective is to show that, as long as $f'(n\hat\theta)\ne \alpha$, a firm can always engineer a package $(p',\hat\theta')=(p+\Delta p,\hat\theta+\Delta \hat{\theta})$ such that (i) a caring ...
user avatar
  • 877
5 votes
Accepted

Understanding an article in the BMJ about the sugar tax

A little background. The paper relates to a tax (known as the Soft Drinks Industry Levy) introduced by the UK in 2018 on some soft drinks, levied on manufacturers (not consumers), with the aim, ...
user avatar
  • 7,268
5 votes
Accepted

Pigouvian tax with general utility function

The first order condition for individual $a$ when the price of $y$ equals $p_y(1+t)$ is given by: $$ \frac{\partial u_a}{\partial y_a} = p_y(1+t) \left(\frac{1}{p_x} \frac{\partial u_a}{\partial x_a} \...
user avatar
  • 8,642
5 votes
Accepted

How can I show convexity of this value function?

Suppose that $u(C,l)=\sqrt{C}-l^2$ and $f(l,A)=\big(l+g(A)\big)^2$, where $g$ is any function of $A$ that is not convex. Then $$u\big(f(l,A),l\big)=l+g(A)-l^2.$$ The optimal labor supply is given by $...
user avatar
4 votes

Why is capital income taxed differently than wage income?

There are two main reason for the difference in tax rates that I see from the literature. First, some papers argue that the optimal tax rate on capital is zero. This is the famous "Chamley-Judd" ...
user avatar
  • 5,434

Only top scored, non community-wiki answers of a minimum length are eligible