This paper establishes a simple model of long run economic and political development, which is driven by the inherent technical features of different factors in production, and political conflicts among factor owners on how to divide the outputs. The main capital form in economy evolves from...

This paper shows that whether natural resources are good or bad for a country’s development crucially depends on the interaction between institutional setting and the type of resources possessed by the country. Some natural resources are, for economical and technical reasons, more likely to...

This paper decomposes the resource curse and its potential reversal in three important dimensions; type of resource, type of institutional measure, and time. Studying components of primary exports we find that the curse is (to various degrees) present for all components but that its possible...

Ideas about what is "fair" above and beyond the individuals' position in the income ladder determine preferences for redistribution. We study the dynamic evolution of different economies in which redistributive policies, perception of fairness, inequality and growth are jointly determined. We...

This paper describes the political economy of shadow banking and how it relates to the dramatic institutional changes experienced by global capitalism over past 100 years. We suggest that the dynamics of shadow banking rest on the distributive tension between workers and firms. Politics wedge...

We use real]time annual data on the fiscal balance, government current spending, current revenues and net capital outlays as published at a half yearly frequency in the OECD Economic Outlook for 25 OECD countries. For each fiscal year t we have a number of forecasts, a first release, and...

We augment a standard tax model by concerns about tax equity: people get upset when labour is taxed more heavily than capital. Even the slightest concern for tax equity invalidates the common recommendation for small open economies that capital should remain tax-exempt. This holds for exogenous...

We study the dynamic Ramsey problem of finding optimal public debt and linear taxes on capital and labor income within a tractable infinite horizon model with incomplete markets. With zero public expenditure and debt, it is optimal to tax the risky labor income and subsidize capital, while a...

The worst global downturn since the Great Depression has caused ballooning budget deficits in most nations, as tax revenues collapse and governments bail out financial institutions and attempt countercyclical fiscal policy. With notable exceptions, most economists accept the desirability of...

A growing literature suggests that office motivated politicians manipulate fiscal policy instruments in order to seek their re-election. This paper investigates the impact of electoral manipulation of the level and composition of fiscal policy on incumbent’s re-election prospects. This impact...