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Christophe Chamley

Bio: Christophe Chamley is an academic researcher from Boston University. The author has contributed to research in topics: General equilibrium theory & Debt. The author has an hindex of 11, co-authored 31 publications receiving 2630 citations. Previous affiliations of Christophe Chamley include Yale University & Congress of Racial Equality.

Papers
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Journal ArticleDOI
TL;DR: In this article, the optimal tax on capital income in general equilibrium models of the second best is analyzed and shown to be zero in the long run for a special case of additively separable utility functions and conditions that are sufficient for the local stability of the steady state.
Abstract: This paper analyzes the optimal tax on capital income in general equilibrium models of the second best. Agents have infinite lives and utility functions which are extensions from the Koopmans form. The population is heterogeneous. The important property of the models is the equality between the social and the private discount rates in the long run. I find that the optimal tax rate is zero in the long run. For a special case of additively separable utility functions, I then determine the tax rates along the dynamic path and conditions that are sufficient for the local stability of the steady state.

1,374 citations

Journal ArticleDOI
TL;DR: In this paper, the authors characterize the unique symmetric perfect Bayesian equilibrium and study the robustness of delay, which turns out to be sensitive to the reaction speed and the number of players.
Abstract: We model investment as an N-player game with a pure informational externality. Each player's payoff depends only on his own action and the state of nature. However, because a player's action reveals his private information, players wait to see what other players will do. Equilibrium is inefficient because delay is costly and information is imperfectly revealed. We characterize the unique symmetric perfect Bayesian equilibrium and study the robustness of delay, which turns out to be sensitive to the reaction speed and the number of players. We establish the following results. (i) When the period length is very short, the game ends very quickly and there is a form of herding or informational cascade which results in a collapse of investment. (ii) As the period length increases, the possibility of herding disappears. (iii) As the number of players increases, the rate of investment and the information flow are eventually independent of the number of players; adding more players simply increases the number who delay. (iv) In the limit, the time-profile of investment is extreme, a period of low investment followed either by an investment surge or a collapse.

508 citations

Journal ArticleDOI
TL;DR: In this paper, the welfare cost of capital income taxation is analyzed in a general equilibrium framework, where the private sector is represented by a competitive household endowed with perfect foresight and an infinite life.
Abstract: The welfare cost of capital income taxation is analyzed in a general equilibrium framework, where the private sector is represented by a competitive household endowed with perfect foresight and an infinite life. The value of the welfare cost depends essentially on the elasticity of substitution between capital and labor in the production function. Numerical estimates are presented for different values of the parameters of the model. The welfare gain obtained by the abolition of the capital income tax is smaller when the private sector is not endowed with perfect foresight (it is reduced by about 40 percent when expectations are myopic). The allocation efficiency cost of the corporate tax dwarfs the intertemporal welfare cost.

225 citations

Journal ArticleDOI
TL;DR: In this article, the dynamics of general equilibrium models with externalities in human capital accumulation with respect to productivity growth were analyzed, and a simple necessary and sufficient condition which depends only on the physical production technology was established for a positive impact of physical capital on productivity growth.
Abstract: This paper analyzes the dynamics of general equilibrium models with externalities in human capital accumulation which extends that of Uzawa-Lucas Multiple balanced growth paths, with different growth rates, and a continuum of equilibria (with a unique balanced growth path) may exist In general, endowment shocks can be followed by higher or lower growth rates A simple necessary and sufficient condition which depends only on the physical production technology, is established for a positive impact of physical capital on productivity growth Under the same condition, a sudden removal of capital income taxation lowers welfare Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association

112 citations


Cited by
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Journal ArticleDOI
TL;DR: In this article, the authors present a qualitative and quantitative analysis of the standard growth model modified to include precautionary saving motives and liquidity constraints, and address the impact on the aggregate saving rate, the importance of asset trading to individuals, and the relative inequality of wealth and income distributions.
Abstract: We present a qualitative and quantitative analysis of the standard growth model modified to include precautionary saving motives and liquidity constraints. We address the impact on the aggregate saving rate, the importance of asset trading to individuals, and the relative inequality of wealth and income distributions.

2,738 citations

ReportDOI
TL;DR: In this paper, the theoretical micro-foundations of urban agglomeration economies are studied, based on sharing, matching, and learning mechanisms, and a handbook chapter is presented.
Abstract: This handbook chapter studies the theoretical micro-foundations of urban agglomeration economies. We distinguish three types of micro-foundations, based on sharing, matching, and learning mechanisms. For each of these three categories, we develop one or more core models in detail and discuss the literature in relation to those models. This allows us to give a precise characterisation of some of the main theoretical underpinnings of urban agglomeration economies, to discuss modelling issues that arise when working with these tools, and to compare different sources of agglomeration economies in terms of the aggregate urban outcomes they produce as well as in terms of their normative implications.

2,032 citations

Posted Content
TL;DR: In this paper, the empirical regularities relating fiscal policy variables, the level of development and the rate of growth are described, and they employ historical data, recent cross-section data, and newly constructed public investment series.
Abstract: This paper describes the empirical regularities relating fiscal policy variables, the level of development and the rate of growth. We employ historical data, recent cross-section data, and newly constructed public investment series. Our main findings are: (i) there is a strong association between the development level and the fiscal structure: poor countries rely heavily on international trade taxes, while income taxes are only important in developed economies; (ii) fiscal policy is influenced by the scale of the economy, measured by its population; (iii) investment in transport and communication is consistently correlated with growth while the effects of taxation are difficult to isolate empirically.

1,863 citations

Journal ArticleDOI
TL;DR: The authors argue that the theory of observational learning, and particularly of informational cascades, has much to offer economics, business strategy, political science, and the study of criminal behavior, which can help explain some otherwise puzzling phenomena about human behavior.
Abstract: Learning by observing the past decisions of others can help explain some otherwise puzzling phenomena about human behavior. For example, why do people tend to converge on similar behavior? Why is mass behavior prone to error and fads? The authors argue that the theory of observational learning, and particularly of informational cascades, has much to offer economics, business strategy, political science, and the study of criminal behavior.

1,833 citations

Book
01 Jan 2000
TL;DR: In this paper, an introduction to recursive methods for dynamic macroeconomics is presented, including standard applications such as asset pricing, and advanced material, including analyses of reputational mechanisms and contract design.
Abstract: Recursive methods offer a powerful approach in dynamic macroeconomics. This book contains both an introduction to recursive tools, including standard applications such as asset pricing, and advanced material, including analyses of reputational mechanisms and contract design. The tools are presented with enough technical sophistication to get the reader started working on practical problems. When numerical simulations are called for, the book provides suggestions for how to proceed, as well as references for further reading. The applications cover many substantive issues in macroeconomics, such as equilibrium asset prices, market incompleteness, wealth distribution, fiscal-monetary theories of inflation, government debt, optimal labour and capital taxation, time consistency and credible government policies, optimal social insurance, economic growth and labour market dynamics.

1,685 citations