Do incentives and policy choices of public officials depend on whether they are appointed by an elected body or directly elected by voters? I investigate this question using the example of state grants for highly visible municipal investment projects. To attract these grants, mayors must prepare...

We examine how electoral motives influence active labor market policies that promote (short term) job-creation. Such policies reduce measures of unemployment. Using German state data for the period 1985 to 2004, we show that election-motivated politicians pushed jobpromotion schemes before...

The paper analyzes international environmental agreements that incorporate transfers from a group of industrialized countries to developing countries in a situation of asymmetric information. The framework of the analysis is a static model of transboundary pollution in which information on...

The paper explores the prospects for international environmental cooperation in a context of limited enforcement, if we allow for side-payments between countries and sequential moves in the implementation of the agreement. The framework of the analysis is a static model of heterogenous countries...

The paper analyzes the conditions under which the smaller of two otherwise identical countries prefers the non-cooperative Nash equilibrium to a situation of fully harmonized tax rates. A standard two-country model of capital tax competition is extended by allowing for transaction costs,...

The paper studies the role of capital mobility for efficiency of decentralized fiscal policies in a tax competition model where only a distorting wage, the residencebased and the source-based capital tax are available. We extend Bucovetsky and Wilson (1991) in deriving second-best taxation rules...

This paper develops a stochastic dynamic politico-economic model of sovereign debt to analyze the interaction of sovereign default risk and political turnover. Two parties differ in their preferred size of public spending which is financed by taxes and external debt. Electoral outcomes are...

In intergroup contests a manager advises and motivates her group’s members. Her rewards often depend on the subsequent contest expenditure of the members. I test whether such incentives undermine the credibility and effectiveness of a manager’s efforts. In the different experimental...

This paper examines the relationship between corruption and the composition of public expenditures. First, I derive a theoretical model that links the degree of corruption in a country - to be understood as the prevailing culture of corruption - to distortions in the budget composition. The...

This paper considers the players' behaviour in an asymmetric two-player contest. When do they decide to "struggle" and when to "subjugate"? Analysing contest-success functions it is found that two crucial prerequisites for "struggle" or "war" have to be met. Thus, such an equilibrium is possible...