Does the Progressivity of Taxes Matter for Economic Growth?

ABSTRACT: A sizeable literature has argued that the growth effects of changes in flat rate taxes are small. In this paper, we investigate the relatively unexplored area of the growth effect of changes in the tax structure, in particular, in the progressivity of taxes. Considering such a tax reform seems empirically more relevant than considering changes in flat tax rates. We construct a general equilibrium … [ Read more ]

Defining the New Economy – And determining its relevance to policymaking

So what do the words “new economy” mean? Three articles in this issue of _The Region_ from the Federal Reserve Board of Minneapolis investigate that question, but with an emphasis on economic fundamentals and, ultimately, on the implications for policymaking. The articles are: “Improving our Understanding of Productivity,” “The New
(and Improved) Economy,” and “Old Ideas at Work in the New Economy.”

Do Mergers Lead to Monopoly in the Long Run? Results From the Dominant Firm Model

This 42-page .pdf paper analyzes whether an industry with no antitrust policy will converge to monopoly, competition or somewher in between using a dominant firm model with rational agents, endogenous mergers and constant returns to scale production. It finds that mergers are likely only when supply is inelastic or demand is elastic, suggesting that the ability of a dominant firm to raise prices through … [ Read more ]