We study the effects of unequal representation in the interest-group system on the degree of information transmission between a lobbyist and a policy-maker. Employing a dynamic cheap-talk model in which the lobbyist cares instrumentally about his reputation for truth telling, we show that the...

In this paper we analyze the interaction of income and preference heterogeneity in a political economy framework. We ask whether the presence of preference heterogeneity (arising, for example, from different ethnic groups or geographic locations) affects the ability of the poor to extract...

The thesis of this paper is that political differences between parties are a major explanation of inflation and variations in it, and therefore introduce into real interest rates a risk premium which will vary with creditors' exposure to 'inflationary default', i.e., with the level of public...

We extend the `rational partisan model' of inflation and unemployment by introducing inflation and unemployment dynamics. We investigate the case of Greece, which has had a polarized political system and a problem of persistently high inflation in the last two decades. High inflation can be...

We develop a model where voters differ in their exogenous income and in their ideological views regarding what we call 'racism'. Electoral competition, modelled à la Levy (2004), takes place between (one or several) parties which propose platforms consisting of both an ideological and an...

We introduce endogenous political parties into the Hotelling-Downs voting framework to model the selection of candidates. First, activists choose which party to join, if at all. Second, party members select a champion for the general election. Third, the electorate median voter determines the...

This paper analyzes a model in which different rational individuals vote over the composition and time profile of public spending. Potential disagreement between current and future majorities generates instability in the social choice function that aggregates individual preferences. In...

We study political compromise founded on tacit cooperation. Two political parties must share a fixed pie in each of an infinite sequence of periods. In each period, the party in power has ultimate authority to divide the pie. Power evolves according to a Markov process among a set of political...

The political process often compensates the losers from technical change or international competition in an economically inefficient way, namely by subsidizing or protecting declining industries instead of encouraging the movement of resources to other more productive uses. We find that a...