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It is well known that the distribution of returns from various financial instruments are leptokurtic, meaning that the distributions have "fatter tails" than a Normal distribution, and have skew toward zero. This paper presents a graceful…
This paper analyzes whether a minimum wage should be used for redistribution on top of taxes and transfers. I characterize optimal redistribution for a government with three policy instruments -- labor income taxes and transfers, corporate…
We propose methods for constructing regularized mixtures of density forecasts. We explore a variety of objectives and regularization penalties, and we use them in a substantive exploration of Eurozone inflation and real interest rate…
This paper provides quasi-experimental evidence on how income taxes affect gross hourly wages, utilizing Danish administrative data and a tax reform that introduced joint taxation. Exploiting spousal income for identification, we present…
International trade has been in the forefront of economic development and growth debates. Trade openness, its definition, scope, and impacts have also been studied numerously. Tariff has been dubbed as negative influencer of economic growth…
This study simulates the evolution of artificial economies in order to understand the tax relevance of administrative boundaries in the quality of life of its citizens. The modeling involves the construction of a computational algorithm,…
Congestion pricing is used to raise revenues and reduce traffic and pollution. However, people have heterogeneous spatial demand patterns and willingness (or ability) to pay tolls, and so pricing may have substantial equity implications. We…
Growth rate of real GDP per capita is represented as a sum of two components -- a monotonically decreasing economic trend and fluctuations related to a specific age population change. The economic trend is modeled by an inverse function of…
We study a system of $N$ agents, whose wealth grows linearly, under the effect of stochastic resetting and interacting via a tax-like dynamics -- all agents donate a part of their wealth, which is, in turn, redistributed equally among all…
Taxes finance important government services that are now taken for granted in our society, such as infrastructure, health care, or retirement pensions. Tax authorities everywhere strive to ensure that all individuals and organizations…
The discrepancy between realized volatility and the market's view of volatility has been known to predict individual equity options at the monthly horizon. It is not clear how this predictability depends on a forecast's ability to predict…
We study the statistics of earning forecasts of US, EU, UK and JP stocks during the period 1987-2004. We confirm, on this large data set, that financial analysts are on average over-optimistic and show a pronounced herding behavior. These…
The emerging system at the European level can be conceptualized as a pattern of relations among member states that tends to be reproduced despite disturbances in individual trajectories. The Markov property is used as an indicator of…
Financial models do not merely analyse markets, but actively shape them. This effect, known as performativity, describes how financial theories and the subsequent actions based on them influence market processes, by creating self-fulfilling…
This paper proposes a framework in which agents are constrained to use simple models to forecast economic variables and characterizes the resulting biases. It considers agents who can only entertain state-space models with no more than d…
Hungary's convergence to the developed western economies have been much slower than initially expected. Applying the FOI model, this study investigates whether there were any changes in the convergence process during the second decade of…
We identify fiscal SVAR-IVs by utilizing unexpected variation in the output of trading partner economies, measured by professional forecast errors, to account for the systematic component of fiscal policy. Our identification builds on the…
We consider a regulator driving individual choices towards increasing social welfare by providing personal incentives. We formalise and solve this problem by maximising social welfare under a budget constraint. The personalised incentives…
The international financial system is currently not yet prepared to face a foreseeable crisis mainly motivated by the dichotomy between the real economy and the virtual economy. Skepticism is widespread even when it comes to investments in…
Tax work is costly for society: Administrative tax labour is typically to a high degree shuffled off the government and onto every taxpayer by law. The higher the burden of any tax system, the costlier for society, as taxpayers are unable…