This paper presents a two-party model of fiscal and debt policy which; (i) explicitly models the partisan, stabilisation, and (to some extent) survival motives of politicians; (ii) has predictions that are largely consistent with existing empirical findings about partisan and electoral effects...

This paper studies the Hart-Grossmn-Moore property rights approach to the theory of the firm, under the alternative assumption that bargaining over gains from trade is modelled strategically, rather than axiomatically. With strategic bargaining, the disagreement payoffs (payoffs to the two...

A simple folk theorem of repeated games states that Pareto-efficient outcomes can be achieved in a perfect equilibrium where deviations are punished by a reversion to Nash equilibrium of the associated stage game (Nash threats equilibrium), provided that players are sufficiently patient. In a...

We re-examine, from a political economy perspective, the standard view that higher capital mobility results in lower capital taxes - a view, in fact, that is not confirmed by the available empirical evidence. We show that when a small economy is opened to capital mobility, the change of...

This paper considers the problem facing a central government which can transfer resources between regional governments by use of intergovernmental grants. Regions provide a public good and are subject to privately observed shocks either to income, or demand for, or cost of, the public good....