This paper studies optimal dynamic tax policy under the threat of political reform. A policy will be reformed ex post if a large enough political coalition supports reform; thus, sustainable policies are those that will continue to attract enough political support in the future. We find that...

Much of the political economy analysis of reform focuses on the conflict of interest between groups that stand to gain or lose from the competing policy proposals. In reality, there is also a lot of disagreement about the working of the policy: in addition to conflicting interests, conflicting...

The paper examines the appropriate domain of the Welfare State by exploring the areas in which free enterprise fails to provide adequate welfare state services. The paper outlines a simple coherent strategy for formulating government welfare state policy by identifying the relevant market...

This paper analyses two aspects of banking crises: the choices that banks make to passively roll over loans in default versus actively pursuing their claims; and choices by regulators to ‘punish’ passive and insolvent banks versus rescuing them. Banks may choose to roll over loans in order...

Countries appear to differ considerably in the basic orientations of their corporate governance structures. We postulate the trade-off between objectivity and proximity as fundamental to the corporate governance debate. We stress the value of objectivity that comes with distance (e.g. the market...

The purpose of this paper is to suggest how institutions can be created and modified to devise and implement industrial policy in the emerging market economies. Two main issues confronting industrial policy institutions are how to avoid regulatory capture, that is, having those policy-makers...

In 1994, China began a profound reform of its state-owned enterprises (SOE). We first describe and characterize this progress in two areas: privatization of small state-owned enterprises (SOEs) at the county level and mass lay-offs of excess state workers at the city level. Local governments...

Since monetary union with West Germany on 1 July 1990, eastern female monthly wages have risen by 10 percentage points relative to male wages, but female employment has fallen 5 percentage points more than male employment. Using the German Socio-Economic Panel to study the years 1990–94, I...

Many countries, including economies in transition, have suffered banking crises in recent years. This paper develops a general framework for analysing trade-offs between policies for cleaning banks' balance sheets of bad debt. The framework - a two-tier hierarchy consisting of regulators, banks,...

This paper provides a brief overview of the East German employment problem and presents a simple model in which to evaluate two rival policy proposals: wage subsidies and revenue-sharing subsidies. Revenue-sharing subsidies have received little, if any, attention in the ongoing public debate on...