Governments choose both the progressivity of the tax system and the amount of public debt in circulation. How should the two be set together? I study the optimal mix of debt and progressivity in heterogeneous-agent incomplete-markets economies, solving for both the long-run optimum and the transition towards it. In the long run, I find that planners with stronger preferences for redistribution choose more progressive tax systems but lower levels of public debt. This is driven by an interest rate channel: redistributive taxation reduces the demand for safe assets and lowers the premium on public debt, making government borrowing more expensive. The same premium also shapes the transition. The planner issues debt while the premium is high, frontloads redistribution, and then raises taxes as debt accumulates and the premium falls.

Models of lumpy capital adjustment are too responsive to interest rates relative to empirical evidence. We argue that allowing for small convex adjustment costs in labour can help these models better match the data. Convex costs cause labour to increase slowly in response to a shock thus smoothing out the impact on the marginal product of capital. Due to both depreciation and uncertainty over future productivity, this delay in the benefits of additional capital can have a large impact on the responsiveness of capital investment.

We use a simple model to study the effects of tariffs on the current account balance when a country runs permanent trade deficits. The model features a country that supplies a liquid asset to the rest of the world, which allows the country to run a permanent and sustainable current account deficit. Unlike in models based on the traditional intertemporal approach, tariffs do not affect saving through their effects on real interest rates, and have muted effects on the current account balance. We also show how shifts in liquidity demand and taxes on world liquidity can be interpreted from a trade-policy perspective.

We study optimal commodity taxation when consumers are rationally inattentive and the planner internalizes their attention costs. In our setting, consumers may underreact to taxes, may allocate attention unevenly across goods, and may display sparse behavior or mental accounting. Our main result is that this need not change tax design: in a benchmark, optimal taxes satisfy the same sufficient-statistics formulas as in classical public finance, regardless of the extent and endogeneity of inattention. Away from this benchmark, we offer a dual rationale for state-dependent taxes and a new lens on tax salience; but we still find no room for the adjustments emphasized in recent work on behavioral public finance.

We introduce ARDE (Agentic Research Development Environment), a modular, open-source environment for autonomous research. ARDE has three main building blocks – a minimal agentic loop that coordinates models and execution; skills that structure research into tasks with clear inputs, outputs, and success criteria; and pluggable orchestration that arranges skills into workflows. This architecture lets ARDE treat research as a search problem over skills, exploring sequences of tasks, evaluating each step, and deciding whether to continue, branch, or backtrack. We apply ARDE to economic research and show that the same pipeline generalizes across problem classes. We release the complete system along with ARDE-Bench, an open evaluation for AI reasoning in hard-to-verify research tasks.

This chapter sheds some light on the prospects for the Ecuadorian economy in the aftermath of the Revolución Ciudadana and a permanent reduction in oil prices. Given that the economy’s progress is contingent on whether or not private sector investment can take over and replace the public sector as the main engine of the economy, I have focused on how fiscal policy can affect private investment decisions. So, this analysis relates to the importance of solving the implementation problem in order to ensure that the economy moves toward a period of growth and increasing living standards. Whether fiscal authorities manage to construct a credible and strategic fiscal policy will determine the economic outcomes to be realized in the future. Moreover, given that individual preferences may not be separable from government expenditures, the need to create a fiscal stabilization fund has been emphasized, as well as the importance of focusing adjustments on current rather than capital expenditures.