Who watches the watchmen? In order to examine the role of the governance separation of powers principle in economics, we developed a theoretical model of a structurally failed market with and without political pressure. We conclude that if the executive branch is dedicated to its public duty,...

Public investment spending declined steadily in advanced economies during the last three decades. Germany is a case in point where the aggregate decline coincided with growing inequality in investments across districts. What explains the variation in local investment spending? We assembled a...

A micromanager "obsesses" over minor details. We consider a simple principal-agentmodel where the agent produces output using primary and secondary effort, where secondary effort is less productive. We say the principal micromanages when she monitors secondary effort. We show that the principal...