Browsing by Author "Diamond, John W."
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Item A Summary of the Dynamic Analysis of the Tax Reform OptionsCarroll, Robert; Diamond, John W.; Johnson, Craig; Mackie, James III; James A. Baker III Institute for Public PolicyItem Background Information: Key Elasticities in the Diamond-Zodrow ModelDiamond, John W.; Zodrow, George W.; James A. Baker III Institute for Public PolicyIn this background document, the authors provide some information on the choices of key parameter values used in the Diamond-Zodrow model. They focus on parameters involving labor supply, saving, international capital flows and substitution among factors of production.Item Computable General Equilibrium Modeling of Tax Reform in New ZealandDiamond, John W.; Zodrow, George R.; James A. Baker III Institute for Public PolicyItem Dynamic Analysis of the Tax Reform Act of 2014Diamond, John W.; James A. Baker III Institute for Public PolicyItem Dynamic Estimates of the Macroeconomic Effects of the House Republican Tax Reform BlueprintDiamond, John W.; Zodrow, George R.; James A. Baker III Institute for Public PolicyItem Dynamic Scoring: How Will It Affect Fiscal Policymaking?Diamond, John W.; James A. Baker III Institute for Public PolicyItem Dynamic Treatments of Heterogeneity(2014-04-23) Dinh, Trang; Sickles, Robin C.; Diamond, John W.; Wilson, Rick K.In this thesis we are interested in how unobserved heterogeneity of agents affects the predictions from several different classical dynamic models that are widely used in economics. First, we capture heterogeneity in users’ preferences in order to obtain a better prediction for their movie ratings as our solution for the Netflix Prize competition. Our method combines user-based and item (movie) based methods in a spatial regression framework. Next, we introduce heterogeneous income profiles in a model of housing choices where households have options of renting, buying a house, and/or keeping the old house (if they already have one). While most lifecycle models of consumption and saving assume that individuals are ex-ante identical and face the same income process, we allow for the more realistic setting where each individual faces a different income process. We next investigate lifetime saving and investing behaviors of US households using the Panel Study of Income Dynamics (PSID) to detect changes in those behaviors due to retirement. Addressing heterogeneity in households’ saving and investing decision is essential in order to separate the aging effect from the household and cohort effect.Item Economy Policy: Recommendations for the Next Administration(James A. Baker III Institute for Public Policy) Diamond, John W.; Countryman, Leslie; James A. Baker III Institute for Public PolicyItem Essays on wealth distribution and tax reform(2007) Tung, Joyce Chia-Hsing; Zodrow, George R.; Mieszkowski, Peter; Diamond, John W.The first essay applies a panel approach to investigate household wealth accumulation and distribution across lifetime income groups for all existing cohorts. Differentiating lifetime income groups with self-reported wages from the Panel Study of Income Dynamics and imputing missing pension values with multiple-imputation procedure improves previous estimates of lifetime wealth profiles. The findings suggest a very wide dispersion in the distribution of accumulated wealth both across and within lifetime earnings groups. The second essay reviews different methods of modeling the foreign sector and assesses the ways in which the estimated effects of a fundamental tax reform might be altered when different specifications of the foreign sector are utilized. The last essay employs a dynamic overlapping-generations lifecycle computable general equilibrium (LC-CGE) model to evaluate various macroeconomic effects of a Flat Tax reform in a large open economy setting. Simulation results indicate the welfare gains of a Flat Tax reform in a large open economy are about 15-20 percent larger than in a closed economy model with similar structural settings and parameter values. Access to international capital market provides an additional channel through which the domestic economy can expand its capital stock and investment. Also, potential declines in the values of the two non-corporate non-housing sectors during transition could be significant.Item Fiscal Imbalance in the United States: Where Do We Stand?(James A. Baker III Institute for Public Policy) Diamond, John W.; Zodrow, George R.; James A. Baker III Institute for Public PolicyItem Fiscal Stimulus 101: Lower Taxes and Sensible Spending(James A. Baker III Institute for Public Policy) Diamond, John W.; James A. Baker III Institute for Public PolicyItem Fundamental Tax Reform: Then and Now(James A. Baker III Institute for Public Policy) Diamond, John W.; Zodrow, George R.; James A. Baker III Institute for Public PolicyItem Houston’s Pension Shortfall: Implications of Basic Pension AnalysisDiamond, John W.; James A. Baker III Institute for Public PolicyItem How Budgetary Choices Affect Work, Saving, and Growth: The Real Purpose of 'Dynamic' EstimatingDiamond, John W.; James A. Baker III Institute for Public PolicyItem Income Variability: Effects on U.S. Income Inequality and Tax Progressivity(2012-09-05) Splinter, David; Zodrow, George R.; Diamond, John W.; Narajabad, Borghan N.; Ostdiek, BarbaraIncome variability explains a significant fraction of the increase in annual income inequality. Chapter 1 considers the impact of variability on tax unit inequality. Using income tax return panel data, I estimate that between a tenth and a quarter of the increase in top one percent income shares between the early 1980s and 2000s was caused by variability. Increased income variability over this period resulted from mean-reverting fluctuations in the bottom quintile and top one percent. Variability in the top of the distribution seems partly driven by permanent income shifting in response to the Tax Reform Act of 1986. Chapter 2 examines the individual earnings distribution. Using Social Security Administration earnings panel data, I estimate that variability explains half of the increase in annual inequality in the bottom half of the distribution between 1973 and 1985. When workers with years of zero earnings are included, increasing earnings variability explains almost all of this group's increase in inequality. The increase in earnings variability appears to be explained by an increased fraction of working age men with years of zero earnings. Annual individual earnings inequality in the bottom half of the distribution not only increased with variability in the 1970s and 1980s, but also fell with variability in the 1950s and early 1960s. This suggests that the U-shaped trend in income inequality observed over these four decades was partly caused by first a fall and then a rise in earnings variability. Between 1985 and 2000, falling variability caused most of the decline in annual earnings inequality within the bottom half of the distribution. Within the top of the distribution, earnings inequality increased over this period because of changes in permanent earnings and not increasing variability. Income variability means that in a progressive tax system annual and lifetime federal tax rates can diverge. Chapter 3 shows that on an annual basis, those at the bottom of the distribution pay little or no federal income taxes, while on a lifetime basis they pay average tax rates about five percentage points higher. Income variability also means there is a trade-off between vertical and horizontal equity.Item Income Volatility and Mobility: U.S. Income Tax Data, 1999-2007(James A. Baker III Institute for Public Policy) Splinter, David; Bryant, Victoria; Diamond, John W.; James A. Baker III Institute for Public PolicyHow do earnings volatility and mobility impact different income groups? We describe household earnings volatility by the full distribution of percent earnings changes and contrast measures of relative and absolute mobility using a panel of U.S. income tax returns from 1999 to 2007. While earnings volatility looks similar across most of the income distribution, we find more volatility among the bottom quintile of households, mostly from earnings gains, and more volatility among the top one percent, mostly from earnings losses. Large earnings gains persist more for the bottom quintile and large losses persist more for households higher up the income distribution. In contrast to typical findings of lower relative mobility among the bottom and top quintiles, we find higher absolute earnings mobility among households at the extremes of the distribution.Item Lifecycle Wealth Holdings by Lifetime Income(James A. Baker III Institute for Public Policy) Diamond, John W.; Tung, Joyce; James A. Baker III Institute for Public PolicyItem Macroeconomic Effects of a 10-Year Infrastructure and Tax Plan(James A. Baker III Institute for Public Policy) Diamond, John W.; Zodrow, George W.; James A. Baker III Institute for Public PolicyItem Macroeconomic Effects of the Inflation Reduction ActDiamond, John W.; James A. Baker III Institute for Public PolicyItem Modeling U.S. and Foreign Multinationals in an OLG-CGE Model(James A. Baker III Institute for Public Policy) Diamond, John W.; Zodrow, George R.; James A. Baker III Institute for Public Policy
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