This paper formally identifies an important role of banks: Banks competitively internalize production externalities and … facilitate economic growth. I formulate a canonical growth model with externalities as a game among consumers, firms, and banks …. Banks compete for deposits to seek monopoly profits, including externalities. Using loan contracts that specify price and …

The paper emphasizes the role of institutions and incentives in the presence of externalities. An economy with multiple … public decision makers is likely to experience “overspending,” “undertaxing,” “overborrowing,” and “overinflation” unless …

Vertical tax externalities between levels of government can occur in federal structures, with responses to the tax … governments co-occupy the same tax base. This paper examines these externalities by considering their implications for a range of …

The move from individual decision making to committee decision making is widely seen as a major evolution in …

We propose a theory to explain why, and under what circumstances, a politician gives up rent and delegates policy tasks … to an independent agency. We apply this theory to monetary policy by extending a standard dynamic ""New …-Keynesian"" stochastic general equilibrium model. This model gives a new theory of central bank independence that is unrelated to the …