“¿Cómo afectan el capital público y el capital humano al crecimiento? Un análisis para las regiones españolas en el marco neoclásico”, Investigaciones Económicas 23(1), 1999
Abstract. This paper estimates the neoclassical growth model following Mankiw-Romer-Weil (1992) and using data for spanish regions from 1969 until 1991. The proposed specification includes fixed effects and it is estimated using the instrumental variable method. Public and human capital are included and model predictions are tested. The estimated conditional convergence rate is around 18% much higher than that found in the literature. This estimate implies a capital share in production smaller than expected. The estimates of the parameters of human capital in the model yield anomalous results and this fact lead to a different specification of the production function with respect to human capital.
“Should Fiscal Policy Be Different in a Non-Competitive Framework?”, Journal of Monetary Economics, vol. 50/6, 2003 (for a working paper version click here)
Abstract. This paper studies if imperfections in the labor market justify a different fiscal policy. We present a dynamic general equilibrium model with a Ramsey planner deciding about public spending, labor taxes and debt. Two different labor market setups are considered. First we assume a competitive labor market and then we introduce a union with monopoly power in the labor market. Both models reach the same conclusion as regards the cyclical properties of the optimal policy: it is not optimal to implement a countercyclical fiscal policy. We also find that government spending should be larger under perfect competition. These main results arise both under complete and incomplete markets for the debt.
“Optimal Fiscal Policy with Rationing in the Labor Market”, Topics in Macroeconomics vol. 5 No. 1, 2005 (for a working paper version click here)
Abstract. This paper studies the implications for the optimal policy of introducing an exogenous minimum wage into a standard public finance model. We present a dynamic general equilibrium model with a Ramsey planner deciding about public spending, labor income taxes and debt. We find that, for sufficiently high minimum wages, equilibria in which the labor supply is rationed and involuntary unemployment arises may be optimal in bad times. For not too high minimum wages, the government will set taxes to reduce labor supply and avoid non desirable rationing. As regards the cyclical properties of the optimal policy, state contingent returns on debt are used as shock absorbers so as to smooth private consumption over time and across states of nature.
“Optimal Minimum Wage in a Competitive Economy: An Alternative Modelling Approach”, joint with Juan F. Rubio-Ramírez (Duke University), Economic Modelling, Vol. 24/5 pp. 778-796, 2007 (for a working paper version click here)
Abstract. This paper analyzes whether a minimum wage can be an optimal redistribution policy when distorting taxes and lump-sum transfers are also available in a competitive economy. We build a static general equilibrium model with a Ramsey planner making decisions on taxes, transfers, and minimum wage levels. Workers are assumed to differ only in their productivity. We find that optimal redistribution may imply the use of a minimum wage. The key factor driving our results is the reaction of the demand for low skilled labor to the minimum wage law. Hence, an optimal minimum wage appears to be most likely when low skilled households are scarce, the complementarity between the two types of workers is large or the difference in productivity is small. The main contribution of the paper is a modelling approach that allows us to adopt analysis and solution techniques widely used in recent public finance research. Moreover, this modelling strategy is flexible enough to allow for potential extensions to include dynamics into the model.
“Fiscal Policy and Minimum Wage for Redistribution: An Equivalence Result”, joint with Juan F. Rubio-Ramírez (Duke University) , Economics Bulletin, Vol. 5, No. 11 pp. 1-8, 2008
Abstract. In this paper we derive conditions under which a minimum wage law combined with anonymous taxes and transfers and an agent-specific tax-transfer scheme are equivalent redistribution policies.
“Optimal fiscal policy in a multisector model: The price consequences of government spending”, joint with Steve Cassou (Kansas State University), Journal of Public Economic Theory Vol. 11 (2), pp. 177–201, 2009 (for a working paper version click here)
Abstract. This paper investigates optimal fiscal policy in a static multisector model. A Ramsey type planner chooses tax rates on each good type as well as spending levels on each good type subject to an exogenous total expenditure constraint. It is shown that, like taxes, government spending policy has price effects and that these price effects have significant implications for optimal policy. These price effects imply a U shape to the government's objective function and this U shape results in boundary values for the choice of the spending allocation. In particular, it is shown that the optimal allocation of government spending tends to be concentrated on one good rather than spread among many goods.
“Second-best tax policy and natural resource management in growing economies”, joint with Steve Cassou (Kansas State University), María José Gutiérrez (Universidad del País Vasco) and Steve Hamilton (Cal Poly State University) . International Tax and Public Finance Vol. 17(6), pp. 607-626, 2010 (for a working paper version click here)
Abstract. This paper investigates the exploitation of environmental resources in a growing economy within a second-best fiscal policy framework. Agents derive utility from two types of consumption goods .one which relies on an environmental input and one which does not .as well as from leisure and from environmental amenity values. Property rights for the environmental resource are potentially incomplete. We connect second best policy to essential components of utility by considering the elasticity of substitution among each of the four utility arguments. The results illustrate potentially important relationships between environmental amentity values and leisure. When amenity values are complementary with leisure, for instance when environmental amenities are used for recreation, taxes on extractive goods generally increase over time. On the other hand, optimal taxes on extractive goods generally decrease over time when leisure and environmental amenity values are substitutes. Under some parameterizations, complex dynamics leading to non-monotonic time paths for the state variables can emerge.
