We report on an on-going project, which asks a number of questions relevant to the study of state capacity. What are the main economic and political determinants of the state’s capacity to raise revenue and support private markets? How do risks of violent conflict affect the incentives to...

One of the key goals of political economy is to understand how institutional arrangements shape policy outcomes. This paper studies a comparatively neglected aspect of this - the forces that shape heterogeneous performance of autocracies. The paper develops a simple theoretical model of...

Governments frequently intervene to support domestic industries, but a surprising amount of this support goes to ailing sectors. We explain this with a lobbying model that allows for entry and sunk costs. Specifically, policy is influenced by pressure groups that incur lobbying expenses to...

This paper exploits data on the pattern of violence across regions and over time to estimate the impact of the peace process in Northern Ireland on house prices. We begin with a linear model that estimates the average treatment effect of a conflictrelated killing on house prices - showing a...

This paper explores the impact of trade on growth when firms are heterogeneous. We find that greater openness produces anti-and pro-growth effects. The Melitz-model selection effects raises the expected cost of introducing a new variety and this tends to slow the rate of new-variety introduction...

The study of welfare capitalism is concerned with a founding question of political economy, namely how capitalism and democracy can be combined. Ever since the publication of Esping-Andersen’s Three Worlds of Welfare Capitalism in 1990, the answer was sought in identifying ideal types of...

Formal analysis of the political economy of trade policy was substantially redirected by the appearance of Gene Grossman and Elhanan Helpman’s 1994 paper, “Protection for Sale”. Before that article a fairly wide range of approaches were favoured by various authors on various issues, but...

Commodity taxes have three distinct roles: (1) revenue collection, (2) interpersonal redistribution, and (3) resource allocation. The paper presents an integrated treatment of these three concerns in a second-best general equilibrium framework, which leads to the 'generalised Ramsey rule' for...

We focus on a relatively neglected area of the tax-compliance literature in economics, the behaviour of firms. We examine the impact of alternative audit rules on receipts from a tax on profits in the context of strategic inter- dependence of firms. In the market firms may compete in terms of...

This paper analyzes optimal unemployment insurance over the business cycle in a search model in which unemployment stems from matching frictions (in booms) and job rationing (in recessions). Job rationing during recessions introduces two novel effects ignored in previous studies of optimal...