Using Musgrave's The Theory of Public Finance as a starting point, this paper reviews the scholarly developments in Public Sector Dynamics during the past three decades, placing emphasis not only on accomplishments but also areas in need of additional research. The review is organized into...

Monetary theory and policy are part of intertemporal public finance. The lecture reviews some interesting recent developments. The two ghosts are the venerable liquidity trap and the Pigou effect or real balance effect. The eccentricities are negative nominal interest rates and the helicopter...

We explore the role of government in the nexus of finance and trade starting from the earliest days of organised finance in England and then broadening the analysis to 84 countries from 1960 to 2004. For 18th century England, we find that the government expenditures and international trade did...

The fundamental feature of private contracting is its relational nature. When faced with unforeseen or unexpected circumstances, private parties, as long as the relation remains worthwhile, adjust their required performance without the need for costly renegotiation or formal recontracting....

Estimates of democracy's effect on the public sector are obtained from comparisons of 142 countries over the years 1960-90. Based on three tenets of voting theory -- that voting mutes policy preference intensity, political power is equally distributed in democracies, and the form of voting...

This paper demonstrates that there is a robust empirical association between the extent to which an economy is exposed to trade and the size of its government sector. This association holds for a large cross-section of countries, in low- as well as high-income samples, and is robust to the...

We establish two underappreciated facts about costly search. First, unless demand is perfectly inelastic, search frictions can result in significant deadweight loss by decreasing consumption. Second, whenever cross-price elasticities are non-zero, costly search in one market also affects...