Optimal debt, endogenous fertility, and human capital externalities in a model with altruistic bequests

and human capital externalities. Because of such externalities, education investment is too low and fertility is too high. While education subsidies are the conventional means to deal with these problems, we show that the optimal policy also comprises debt even when distortionary taxes are used. The reason is that debt tips the usual trade-off between children's quantity and quality in favor of the latter by increasing the bequest cost of children. The optimal debt-output ratio exceeds 10% for plausible parameterization. (C) 2002 Elsevier B.V. All rights reserved.

The regulatory challenges in engineering a safer tipple

David Nutt asks two very important questions. Can we make alcohol safer? Can we use pharmacology and neuroscience to engineer a safer alternative to alcohol? The answer to the first question is clearly ‘yes’. We can make alcohol safer by encouraging drinkers to consume less alcohol per occasion. That goal can be accomplished by imposing lower taxes on lower alcohol beverages or a volumetric tax on alcoholic beverages (Babor et al., 2003).