relies on the fact that tax evasion is more prevalent in the non-traded sector, which is dominated by services and the self …-employed. Heavy reliance on tax-based fiscal consolidations induces a reallocation of economic activity towards the non-traded sector …. Using IMF data for the period 1980-2011 we find that budget consolidations which rely more on tax increases than on spending …

We propose a theory of tax centralization and inter governmental grants in politico-economic equilibrium. The cost of … the local level. This renders the degree of tax centralization and the tax burden determinate even if none of the …

subsidies guaranteeing the same (pre-tax) level of income (achieved by the government supplementing the wage income of workers … receive political support unless it is supplemented by increased taxation of profits (after-tax profits are also likely to …

I analyze how lack of commitment affects the maturity structure of sovereign debt. Governments balance benefits of … default induced redistribution and costs due to income losses in the wake of a default. Their choice of short- versus long …

debt as a means to i) deliver intergenerational transfers or ii) smooth tax distortions. We find that certain politico …

policy. The model predicts population ageing to lead to larger social security systems, but eventually lower benefits per … retiree. Under realistic parameter values, it predicts a social-security tax rate close to the actual one, but higher than the … Ramsey tax rate. Closed-form solutions for the case with endogenous labor supply, tax distortions, and multiple policy …

“blunt instrument” for redistribution. To do so we build a model in which workers are heterogeneous in ability, and the … government engages in redistribution through the public provision of private goods. We show that the MW institution is … politically viable only when there is a limited degree of in-kind redistribution. To examine the empirical relevance of our …

The relationship between inequality and redistribution is usually studied under the assumption that the government …