This paper constructs a general equilibrium model with monopolistically competitive firms and endogenous markups where government spending consists of both consumption and investment goods. It is shown that when markups are countercyclical, increases in the share of investment goods in aggregate...

Corruption, particularly political or “grand” corruption, distorts the entire decision-making process connected with public investment projects. The degree of distortions is higher with weaker auditing institutions. The evidence presented shows that higher corruption is associated with (i)...

We study the effects of electoral institutions on the size and composition of public expenditure in OECD and Latin American countries. We present a model emphasizing the distinction between purchases of goods and services, which are easier to target geographically, and transfers, which are...