Essays on international macroeconomics and fiscal policy

The first essay shows how a parsimonious model with home production jointly explains the "labor wedge" and prominent puzzles of the international business cycle. If market and home activity are substitutes, then the measured labor wedge increases whenever market consumption and employment decrease Home production breaks the tight negative link between market consumption and its marginal utility and helps explain the international risk sharing puzzle. In a two-country model in which the labor wedge is endogenously generated to match its empirical moments, output and employment are more correlated than consumption and investment across countries, relative consumption is negatively related to the real exchange rate, and real net exports are countercyclical. The second essay investigates Gender Based Taxation (GBT). GBT satisfies Ramsey's rule because it taxes at a lower rate the more elastic labor supply of women. This holds when different elasticities between men and women are taken as exogenous. We study GBT in a model in which labor supply elasticities emerge endogenously from the bargained allocation of goods and time in the family. We explore three cases: superior bargaining power for men, higher men wages and higher women productivity in home duties. In all cases, men commit to a career in the market and take less home duties than women. As a result, their market work becomes less substitutable to home duty. When society resolves its distributional concerns efficiently with gender-specific lump sum transfers, GBT with higher marginal tax rates on men is optimal. The third essay examines the relationship between inequality and redistribution in a panel of OECD countries. Using panel data methods that hold constant a variety of determinants of redistributive spending, I find a non-monotonic relationship between pre-tax-and-transfer distribution of income and redistribution. Relative to mean income, a more affluent rich and middle class are associated with less redistribution and a richer poor class is associated with more redistribution. These results are consistent with a one dollar, one vote politico-economic equilibrium: When the income of a group of citizens increases, aggregate redistributive policies tilt towards this group's most preferred policies.