This paper studies the macroeconomic effects of seven key TCJA provisions, including the tax cuts for individuals and businesses, the bonus depreciation of equipment, the amortization of R&D expenses, and the limits on interest deductibility. I use a dynamic general equilibrium model with interest deductibility and accelerated depreciation. I find that, initially, the tax reform had a small positive effect on output and investment. In the medium term, however, the effect on output will diminish, and the effect on investment will turn negative. The tax reform will depress investment in R&D. Government debt will surge.

We use a New Keynesian DSGE model with search frictions on the housing market to evaluate how financing a labor tax reduction by higher property taxation affects the real economy and welfare. Search on the housing market enables us to explicitly model stocks and flows, which is necessary to differentiate between recurrent property taxes (levied on stocks) and property transaction taxes (levied to flows). We find that using recurrent property taxation as financing instrument outperforms other instruments although all policy measures increase aggregate economy-wide welfare. Our simulations suggest that using property transaction taxation as financing instrument is the least favorable measure.

Since 2007, Burkina Faso's mining sector has grown quickly, with gold replacing cotton as the country's biggest export. The decline in gold prices since 2012, however, has hit the Burkina Faso economy hard. Using a static computable general equilibrium model, we assess whether – in a context of gold-price decline and volatility – an increase in the tax burden on the mining sector, as implemented by the government of Burkina Faso, is the appropriate way to avoid the natural resource curse. The results show that a tax policy based solely on increasing taxes on the gold sector brings only limited economic benefits, notably in terms of employment, and fails to significantly mitigate the effects of gold-price volatility.

We study the impact of capital and labor taxation in an economy where couples bargain over the intrahousehold allocation under limited commitment. In this framework more wealth improves commitment and gives rise to insurance gains within the household. Our theory motivates these gains by the empirical observation that wealth, in contrast to labor income, is a commonly held resource within households. Based on this observation we study whether eliminating capital taxes from the economy, and raising labor taxes to balance the government’s budget, may generate welfare gains to married households. We illustrate that the quantitative effects from this reform are rather small. We attribute the small effects to the life cycle pattern of wealth accumulation and to the impact of labor income taxes on household risk sharing: In particular, we show that higher labor taxes may make the limited commitment friction more severe, even though they may make the distribution of labor income more equitable within the household.

In contrast to its decentralized political economy model of the 1980s, China took a surprising turn towards recentralization in the mid-1990s. Its fiscal centralization, starting with the 1994 tax reforms, is well known, but political recentralization also has been under way to control cadres directly at township and village levels. Little-noticed measures designed to tighten administrative and fiscal regulation began to be implemented during approximately the same period in the mid-1990s. Over time these measures have succeeded in hollowing out the power of village and township cadres. The increasing reach of the central state is the direct result of explicit state policies that have taken power over economic resources that were once under the control of village and township cadres. This article examines the broad shift towards recentralization by examining the fiscal and political consequences of these policies at the village and township levels. Evidence for this shift comes from new survey data on village-level investments, administrative regulation and fiscal oversight, as well as township-level fiscal revenues, expenditures, transfers (between counties and townships) and public-goods investments.

In constitutional democracies, laws take time to be deliberated upon, to be passed, and to be implemented. Motivated by this observation, we study the properties of optimal tax reform when it has to be announced in advance of its implementation. We find that a delay between announcement and implementation has large effects on the optimal fiscal policy during the transition to the new steady state. On the other hand, we find that the welfare gains from optimal tax reform are fairly robust to the introduction of an implementation lag. Increasing the lag from zero to four years reduces the welfare gains by less than a quarter. Moreover, it turns out that this reduction of the welfare gain is mainly due to the delay itself rather than the effect of preannouncement on the character of the optimal tax reform.

Farmers committed to the overall goal of sustainability in agriculture have banded together to support legislative action favorable to that goal. Specific objectives relate to addition of organic amendments to soils to improve fertility, avoidance of excessive use of pesticides and synthetic fertilizers, crop rotation, species diversity among crops, protection of wildlife habitats, and support of family-operated farms. Currently applicable legislation is believed to be unfavorable to some of these objectives and needs modification.