Optimal tax mix with merit goods

This paper deals with optimal taxation in a two‐class economy with two private commodities and labour. We derive optimal non‐linear income and linear commodity taxes in the presence of merit goods. We formulate merit good arguments via a pathology of individual choice. We assume weak separability between consumption and leisure and show how the standard optimal tax results are modified due to merit good considerations.

The simple analytics of optimal growth with illegal migrants

This paper analyses the impact of illegal migration on the optimal path of domestic (resident) consumption. The analysis draws two important conclusions. First, if illegal migrants and domestic labour are perfect substitutes, illegal migration necessarily lowers the long-run per capita consumption of domestic residents. Second, if illegal migrants and domestic labour are imperfect substitutes, the effect on the long-run per capita domestic consumption is ambiguous, however, in the Cobb–Douglas case, the result is clear cut and per capita domestic consumption rises as a result of illegal migration.