The welfare state is not merely a stand-in for missing markets; it can do a whole lot more. When generations overlap and the young must borrow to make educational investments, a dynamically-efficient welfare state, by taxing the middle-aged and offering a compensatory old-age pension, can...

When confronted with market weaknesses and failures determining sustainability problems for environmental common-pool resources, economic analysis has proposed government intervention as the only alternative available. Elinor Ostrom showed that this dichotomy between market and government is not...

We analyze distributional preferences in games in which a decider chooses the provision of a good that benefits a receiver and creates costs for a group of payers. The average decider takes into account the welfare of all parties and has concerns for efficiency. However, she attaches similar...

This paper formulates a general theory of how political unrest influences public policy. Political unrest is motivated by emotions. Individuals engage in protests if they are aggrieved and feel that they have been treated unfairly. This reaction is predictable because individuals have a...

We use a panel of 21 OECD countries from 1970 to 2009 to investigate the effects of different fiscal adjustment strategies on long-term interest rates – a key fiscal indicator reflecting the costs of government debt service. A government confronted with high deficits and rising debt will...

We employ bootstrap methods (Efron (1979)) to test the effect of an important electoral reform implemented in Italy from 1993 to 2001, that moved the system for electing the Par-liament from purely proportional to plurality rule (for 75% of the seats). We do not find any effect on either the...

We revisit the classical result that financing a pure public good through taxation of private consumption is inefficient. To this standard setup we add a consumption contest in which consumers can win a prize. We show that an appropriately chosen contest—which we call a ‘tax lottery’—can...

Mobility of highly-skilled workers affects and is affected by labor market conditions, taxes, and other policies. This paper documents the demographic and fiscal importance of international migration, especially in aging societies, reviews the efficiency and distributional effects of mobility,...

It is often disregarded that the euro is first of all a public good based on common institutions such the European Central Bank, the Governing Council and a network for executing transactions etc. Establishing a public good is fundamentally different from trade in private goods. A public good...

We examine whether government ideology was correlated with the growth in military expenditure in Germany over the period 1951-2011. By using various measures of government ideology, the results do not show any effect. The exception is an ideology measure based on the Comparative Manifesto...