In this paper we examine the empirical relevance of three prominent endogenous protection models. Is protection for sale, or do altruistic policy makers worry about political support? We find strong evidence that protection is indeed "for sale." The important new result is, however, that not...

We examine to what extent banks’ stock market values during the 2007-2012 financial crisis were driven by increases in the default risk of banks designated as globally systemically important by the Financial Stability Board. We find that bank market values hardly respond to changes in the...

We examine whether a corruption scandal in which the incumbent is implicated undermines trust in local government. We use a novel dataset containing information on local corruption scandals reported in Spain during the period 1999-2009, and data on the level of trust expressed in local...

Initially, voting rights were limited to wealthy elites providing political support for stock markets. The franchise expansion induces the median voter to provide political support for banking development as this new electorate has lower financial holdings and benefits less from the uncertainty...

We show that drought-induced changes in the intensity of riots lead to moves towards democracy in sub-Saharan Africa, and that these changes are often a result of concessions made as a result of the riots. This provides evidence that low-intensity conflict can have a substantial short-run impact...

Four types of “economics” relevant for institutional analysis are distinguished: Standard Neoclassical Economics; Socio-Economics or Social Economics; New Institutional Economics; and Psychological Economics (often misleadingly called Behavioural Economics). The paper argues that an...

There is often a gap between the prescriptions of an “optimal” tax system and actual tax systems, some of which can be neither efficient economically nor efficient at redistributing income. With a focus on personal income taxes, this paper reviews the political economics literature on tax...

While the direct impact of geographic endowments on prosperity is present in all countries, in former colonies, geography has also affected colonization policies and, therefore, institutional outcomes. Using non-colonized countries as a control group, I re-examine the theories put forward by La...

Theory and evidence suggest that in an environment of well-anchored expectations, temporary news or shocks to economic variables, should not affect agents’ expectations of inflation in the long term. Our estimated structural VARs show that both long- and short-term inflation expectations are...

This article analyses the dynamics of electoral promises, building on an electoral competition model with endogenous policies. It extends the Grossman-Helpman (1994) model [Grossman G., Helpman E. [1994], "Protection for sale", American Economic Review, 84, 4, 833-850] to include sanctions from...