Most economists treat fiscal policy as exogenous and consider policymakers as machines to be programmed. Rarely do they seek to determine why, for instance, some countries rely on the inflation tax while others use direct taxation, let alone what political factors affect such decisions. Yet...

The authors use the common agency approach to analyze the joint determination of product and labor market distortions in a small (developing) open economy. Capital owners and union members lobby the government on tariffs and minimum wages, while factors of production in agriculture (the informal...