Daniel Carroll |

Research Economist

Daniel Carroll, Research Economist

Daniel Carroll is a research economist in the Research Department of the Federal Reserve Bank of Cleveland. His primary research interests are macroeconomics, public finance, and political economy. Currently, he is studying the implications of progressive income taxation for the distributions of wealth and income.

Dr. Carroll received a PhD in economics from the University of Virginia. He has a BA from Whitman College in Walla Walla, Washington.

  • Fed Publications
  • Other Publications
Title Date Publication Author(s) Type

 

2014-09 ; Economic Commentary
Abstract: Public debate about the effects of government spending heated up after record-large stimulus packages were enacted to address the fallout of the financial crisis. Almost as noticeable as the discord was the absence of consensus among prominent economists on the issue. While it seems a simple problem to estimate the effect of government spending on output—the size of the government multiplier—it is anything but.

top

 

2012-19 ; Economic Commentary
Abstract: The intended effects of a government policy can be distorted by the public's expectations about how strictly it will be enforced. If households and businesses cannot be certain that a policy will remain unchanged over its scheduled tenure, they will adjust their response to it to reflect this uncertainty. One way of mitigating the uncertaintly is to add rules to new policies when they are enacted that would make altering the policies very difficult in the future.

top

 

May, 2012 Federal Reserve Bank of Cleveland, working paper no. 12-12R ; Dionissi Aliprantis; Working Papers
Abstract: This paper uses an overlapping-generations dynamic general equilibrium model of residential sorting and intergenerational human capital accumulation to investigate the effects of neighborhood externalities. In the model, households choose where to live and how much to invest toward the production of their child's human capital. The return on parents' investment is determined in part by the child's ability and in part by an externality from the average human capital in their neighborhood. We use the model to test a prominent hypothesis about the concentration of poverty within racially-segregated neighborhoods (Wilson 1987). We first impose segregation on a model with two neighborhoods and match the model steady state to income and housing data from Chicago in 1960. Next, we lift the restriction on moving and compute the new steady state and corresponding transition path. The transition implied by the model qualitatively supports Wilson's hypothesis: high-income residents of the low average human capital neighborhood move out, reducing the returns to investment in their old neighborhood. Sorting decreases citywide human capital and produces congestion in the high-income neighborhood, increasing the average cost of housing. On net, average welfare decreases by 3.0 percent of presorting steady state consumption, and 0.01 percent of households starting in the low-income neighborhood receive positive welfare.

top

 

April, 2012 Vol. 3, No. 1 ; Forefront
Abstract: An economist ponders the tradeoffs in tax system design.

top

 

2011-22 ; John Lindner; Economic Commentary
Abstract: The United States is not the first advanced modern economy to face a serious federal budget challenge. A number of countries have seen their debt rise to unacceptable levels in recent decades, and they have taken steps to rein it in. We explore the approaches that Canada and the United Kingdom have used. Though there are important differences in approaches and countries, we draw five useful lessons for the reforms that may be proposed in the U.S. as it addresses its fiscal challenges.

top

 

May, 2011 Web Exclusives; Vol. 2, No. 2 ; Forefront
Abstract: Not if the Federal Reserve does its job.

top

 

February, 2011 Federal Reserve Bank of Cleveland, working paper no. 11-06R ; Working Papers
Abstract: This paper examines the degree of income tax progressivity chosen through a simple majority vote in a model with savings. Households have permanent differences with respect to their labor productivity and their discount factors. The government has limited commitment to future policy so voting is repeated every period. Because the model features mobility within the wealth distribution, the median voter is determined endogenously. In a numerical experiment, the model is initialized to the 1992 U.S. joint distribution of income and wealth as well as several statistics of the federal income tax distribution. Support for a high degree of progressivity is widespread. In the long run, households that vote for lower progressivity have high labor productivity and/or very high wealth. A movement towards greater progressivity decreases aggregate capital and income as well as long-run income and wealth inequality.

top

 

December, 2009 Federal Reserve Bank of Cleveland, Working Paper, no. 09-13 ; Eric R Young; Working Papers
Abstract: This paper compares the steady state outcomes of revenue-neutral changes to the progressivity of the tax schedule. Our economy features heterogeneous households who differ in their preferences and permanent labor productivities, but it does not have idiosyncratic risk. We find that increases in the progressivity of the tax schedule are associated with long-run distributions with greater aggregate income, wealth, and labor input. Average hours generally declines as the tax schedule becomes more progressive implying that the economy substitutes away from less productive workers toward more productive workers. Finally, as progressivity increases, income inequality is reduced and wealth inequality rises. Many of these results are qualitatively different than those found in models with idiosyncratic risk, and therefore suggest closer attention should be paid to modeling the insurance opportunities of households.

top

 

July, 2009 Federal Reserve Bank of Cleveland, Working Paper no. 0906 ; Eric R Young; Working Papers
Abstract: This paper studies sunspot fluctuations in a model with heterogeneous households. We find that wealth inequality reduces the degree of increasing returns needed to produce indeterminacy, while wage inequality increases it. When the model is calibrated to match the joint distribution of hours, income, and wealth, the required degree of increasing returns to scale is still much too high to be supported empirically (although smaller than similar homogeneous agent economies). We also find that the model robustly predicts only one sunspot, despite having 1,262 predetermined state variables.

top
Title Date Publication Author(s) Type
The Long-Run Effects of Changes in Tax Progressivity

 

September, 2011 Journal of Economic Dynamics and Control, vol. 35, no. 9, pp. 1451-1473 ; Eric R Young; Journal Article

top
The Stationary Wealth Distribution under Progressive Taxation

 

July, 2009 Review of Economic Dynamics, July 2009 ; Eric R Young; Journal Article

top