Journal Article Optimal Population and Capital over Time: The Maximin Perspective Get access Guillermo A. Calvo Guillermo A. Calvo Columbia University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 46, Issue 1, January 1979, Pages 59–71, https://doi.org/10.2307/2297172 Published: 01 January 1979 Article history Received: 01 January 1977 Accepted: 01 May 1978 Published: 01 January 1979

We study an example economy with costly labor monitoring under a wage-cum-supervision arrangement, where workers' utilities are not equalized across sectors (workers are identical to each other). Our main task is to look for (and find) a set of "flat" taxes and subsidies that bring about a Pareto improvement over the laissez-faire solution. We show that any of such welfare-improving schemes involves a tax on labor income from those workers whose utility is the lowest.

[We study the time consistency of optimal monetary policy in a framework akin to the one in [12, Ch. 1] but we assume away lump sum taxation--all taxes are distortionary. Our major result is that under perfect foresight (as defined in [8, 23]) optimal monetary policy is bound to be time inconsistent. The paper is closely related to the previous works of Auernheimer [2], and Kydland and Prescott [15].]

[The Rawlsian maximin is defined for situations involving risk and applied to growth with an uncertain technology. Existence and uniqueness are discussed and it is shown to unambiguously lead to at least the same savings as under certainty.]

[Global necessary conditions are obtained for a discrete capital version of the putty-clay model first introduced by Johansen [7]. Convergence of the optimal solution to a steady state is discussed for concave utilities. Also, the role of obsolescence is analyzed when utility is linear]

[We study models in which debt repudiation--openly or through inflation--is possible. The government maximizes the utility of the representative individual, and we focus on no-precommitment equilibria of the Barro-Gordon type. We show cases in which the existence of government bonds generate multiple perfect-foresight equilibria. However, price indexation and/or interest-rate ceilings are shown to be possible solutions of the equilibrium multiplicity problem.]