We present a theory of endogenous fiscal policy and growth. Fiscal policy -- debt, income tax, spending on local public goods and public investment -- is determined through legislative bargaining. Economic growth depends directly on public investment, private investment in human capital and, via...

In this paper I analyze the nature of external adjustments in current account surplus countries. I ask whether a realignment of world growth rates -- with Japan and Europe growing faster, and the U.S. growing more slowly -- is likely to solve the current situation of global imbalances. The main...