We use variation in oil output among Brazilian municipalities to investigate the effects of resource windfalls. We find muted effects of oil through market channels: offshore oil has no effect on municipal non-oil GDP or its composition, while onshore oil has only modest effects on non-oil GDP...

In this paper we examine the main challenges in promoting an effective market economy. While the paper ranges widely across the spectrum of economic institutions and policies, the central theme is the importance of macroeconomic stability for economic growth in the medium and long run....

We propose a normative theory of the number of representatives based on a stylized model of a representative democracy. We derive a simple formula, a "square-root theory" which gives the number of representatives in parliament as proportional to the square root of total population. Simple...

It has been argued that the public sector is an insurance against otherwise uninsurable risks. If that is the case, it is reasonable to expect the public sector to be larger in regions where the private labour-market is risky. Using data from Swedish municipalities, this paper reports that...

China’s economic reforms have resulted in spectacular growth and poverty reduction. However, China’s institutions look ill-suited to achieve such a result, and they indeed suffer from serious shortcomings. To solve "China puzzle" this paper analyses China’s institution - a regionally...

I develop a model of ideologies as collectively sustained (yet individually rational) distortions in beliefs concerning the proper scope of governments versus markets. In processing and interpreting signals of the efficacy of public and market provision of education, health insurance, pensions,...

Our aim is to explain how a small country can be viable as an international banking center (IBC). We build a model in which mobile investors choose between two banking centers located respectively in a small country and in a large country. These countries compete in two instruments, taxation and...

This paper systematically examines the role of fiscal policy, trade and energy taxes on environmental quality in Europe using disaggregated data for 12 European countries over the 1995-2008 period. It uses a methodology that obtains estimates mostly free of time-varying omitted variable biases....

Does fiscal consolidation lead to social unrest? Using cross-country evidence for the period 1919 to 2008, we examine the extent to which societies become unstable after budget cuts. The results show a clear correlation between fiscal retrenchment and instability. We test if the relationship...

The paper studies the effect of additional government revenues on political corruption and on the quality of politicians, both with theory and data. The theory is based on a version of the career concerns model of political agency with endogenous entry of political candidates. The evidence...