Growth,Employment and Taxation with Distortions in the Goods and Labour Market

Abstract. This paper analyses taxation in the presence of distortions in goods and labour markets in an endogenous growth model. The government disposes of capital, labour and consumption taxes. It is shown that the market solution leads to suboptimally low levels of growth and employment. However, available tax instruments are sufficient to attain the first‐best growth path in this economy. The paper further explores the relative distortion of capital and labour taxes. For plausible parametrisations of the model, lowering capital taxes dominate reductions in labour taxes in welfare terms.     

Credit supply and corporate capital structure: Evidence from Japan

In this paper we examine how financial constraints, especially fluctuations in the supply of credit, affect the capital structure of 1537 publicly listed Japanese firms from 1980 to 2007, in a data set with 33,000 observations. It is one of the first studies to do so and is inspired by the recent studies of Leary (2009) and Faulkender and Petersen (2006). Japan was selected due to the extreme credit supply fluctuations observed during the last 30 years. It thus offers an ideal natural experiment to test the impact of credit supply on corporate capital structure. In particular, in our panel data study we investigated the impact of the asset bubble in the 1980s and the credit crunch of the late 1990s on corporate capital structure decisions. The results of this paper show, among other findings, that financial policy decisions are indeed influenced by monetary conditions and the supply of credit. In particular, smaller sized firms face financial constraints, especially during economic downturns.     

The double deficit of the USA and disequilibria in the world economy

The disequilibria in the world economy, of which the massive trade and current account deficits of the USA are but one manifestation, have reached dangerous proportions. The following article presents a number of scenarios to show how they may develop in future.     

The Letters of John Sherman and the Origins of Antitrust

This paper presents a survey of the letters of Senator John Sherman, who pushed for passage of the first federal antitrust law in the United States. By placing these letters in historical context, this paper helps resolve a debate about Sherman's true intentions in creating an antitrust law. In particular, Sherman's letters reveal that he was more concerned with protecting the interests of small and inefficient businesses than with protecting the interests of consumers.