Browsing by Author "Nicolini, Juan Pablo"
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- Optimal cooperative taxation in the global economyPublication . Chari, V. V.; Nicolini, Juan Pablo; Teles, PedroHow should countries cooperate in setting fiscal and trade policies when government expenditures must be financed with distorting taxes? We show that even if countries cannot make explicit transfers to each other, every point on the Pareto frontier is production efficient, so that international trade and capital flows should be effectively free. Trade agreements must be supplemented with fiscal policy agreements. Residence-based income tax systems have advantages over source-based systems. Taxing all household asset income at a country-specific uniform rate and setting the corporate income tax to zero yield efficient outcomes. Value-added taxes should be adjusted at the border.
- Unconventional fiscal policy at the zero boundPublication . Correia, Isabel; Farhi, Emmanuel; Nicolini, Juan Pablo; Teles, PedroWhen the zero lower bound on nominal interest rates binds, monetary policy cannot provide appropriate stimulus. We show that, in the standard New Keynesian model, tax policy can deliver such stimulus at no cost and in a time-consistent manner. There is no need to use inefficient policies such as wasteful public spending or future commitments to low interest rates.