We develop a model of human capital formation with endogenous labour supply and heterogeneous agents to explore the optimal level of education subsidies along with the optimal progressive schedule of the labour income tax and optimal capital income taxes. Subsidies on education ensure efficiency...

We present a simple model to analyse law enforcement problems in transition economies. Law enforcement implies coordination problems and multiplicity of equilibria due to a law abidance and a fiscal externality. We analyse two institutional mechanisms for solving the coordination problem. A...

Approaching demographic shifts are raising concerns about fiscal sustainability in most OECD countries. A widespread view based on the tax-smoothing idea is that a prior consolidation of public finances is required to cope with the predicted trend deterioration in the primary budget balance....

Leaders compensate supporters not just for performing their duties but also in order to preempt an overthrow by the same supporters. We show how succession rules affect the power of leaders relative to supporters as well as the resources expended on possible succession struggles. We compare two...

Gripaios P. and Bishop P. (2005) Government output and expenditure in UK regions and sub-regions: an analysis of the new experimental accounts data, Regional Studies 39 , 805-813. This paper examines the regional and sub-regional distribution of UK state spending by analysing new data available...

The objective of the paper is to test the existence of a relationship between the composition of public expenditures and the macroeconomic outcomes (GDP rate of growth, and unemployment and inflation rates) of the European Union member states during the period 1995-2007. We study the existence...

Five years after the financial crisis, the global economy remains unbalanced and many of the advanced countries are still struggling to return to robust, sustainable growth. Taking a historical perspective, I argue that this predicament reflects a failure to adjust to profound changes in the...

The correlation between a government’s expenditure and revenue has attracted a lot of interest thanks to its policy relevance. This paper delves into the fiscal adjustment process through the expenditure and the revenue of Sri Lanka in the post-reform era from 1979 to 2009. The Augmented...

The impact of trade openness, foreign aid and democracy on government expenditure in developing countries has been emphasized in the literature in recent decades. Nonetheless, most recent studies of Wagner’s law have often neglected the increasing role played by these policy variables. This...

This paper investigates the relationship between government expenditure and economic growth in Ethiopia to test Wagner’s Law which postulates that as real income increases there is a tendency for the share of public expenditure to increase relative to national income. Using the bounds test...