We show that standard expenditure multipliers capture economy-wide effects of new government projects only when financing constraints are not binding. In actual policy making, however, new projects usually need financing. Under liquidity constraints, new projects are subject to two opposite...

This paper tests for the market environment within which US fiscal policy operates, that is we test for the incompleteness of the US government bond market. We document the stochastic properties of US debt and deficits and then consider the ability of competing optimal tax models to account for...

We analyse the implications of optimal taxation for the stochastic behaviour of debt. We show that when a government pursues an optimal fiscal policy under complete markets, the value of debt has the same or less persistence than other variables in the economy and it declines in response to...

Does additional government spending improve the electoral chances of incumbent political parties? This paper provides the first quasi-experimental evidence on this question. Our research design exploits discontinuities in federal funding to local governments in Brazil around several population...

This paper provides regression discontinuity evidence on long-run and intergenerational education impacts of a temporary increase in federal transfers to local governments in Brazil. Revenues and expenditures of the communities benefiting from extra transfers temporarily increased by about 20%...

This paper uses a regression discontinuity design to estimate the impact of additional unrestricted grant financing on local public spending, public service provision, schooling, literacy, and income at the community (município) level in Brazil. Additional transfers increased local public...

We observe that many salient rules to allocate private goods are not only (partially) strategy-proof, but also (partially) group strategy-proof, in appropriate domains of definition. That is so for solutions to matching, division, cost sharing, house allocation and auctions, in spite of the...

Egalitarianism and meritocracy are competing principles to distribute the joint benefits of cooperation. We examine the consequences of letting members of society vote between those two principles, in a context where individuals must joint with others into coalitions of a certain size to become...

We characterize the set of all individual and group strategy-proof rules on the domain of all single-dipped preferences on a line. For rules defined on this domain, and on several of its subdomains, we explore the implications of these strategy-proofness requirements on the maximum size of the...

A social choice function is group strategy-proof on a domain if no group of agents can manipulate its final outcome to their own benefit by declaring false preferences on that domain. Group strategy-proofness is a very attractive requirement of incentive compatibility. But in many cases it is...