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Democratic Capital : The Nexus of Political and Economic Change

Persson, Torsten - 2010

We study the joint dynamics of economic and political change. Predictions of the simple model that we formulate in the paper get considerable support in a panel of data on political regimes and GDP per capita for about 150 countries over 150 years. Democratic capital -- measured by a nation's...

Persistent link: https://www.econbiz.de/10012761656

Time Consistency and Free-Riding in a Monetary Union

Chari, Varadarajan V.; Kehoe, Patrick J. - 2021

We analyze the setting of monetary and nonmonetary policies in monetary unions. We show that in these unions a time inconsistency problem in monetary policy leads to a novel type of free- rider problem in the setting of nonmonetary policies, such as labor market policy, fiscal policy, and bank...

Persistent link: https://www.econbiz.de/10013216840

On the Desirability of Fiscal Constraints in a Monetary Union

Chari, Varadarajan V.; Kehoe, Patrick J. - 2021

The desirability of fiscal constraints in monetary unions depends critically on whether the monetary authority can commit to follow its policies. If it can commit, then debt constraints can only impose costs. If it cannot commit, then fiscal policy has a free-rider problem, and debt constraints...

Persistent link: https://www.econbiz.de/10013223181

Why is Fiscal Policy Often Procyclical?

Alesina, Alberto F.; Tabellini, Guido - 2021

Many countries, especially developing ones, follow procyclical fiscal polices, namely spending goes up (taxes go down) in booms and spending goes down (taxes go up) in recessions. We provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for...

Persistent link: https://www.econbiz.de/10013240582

The Political Resource Curse

Brollo, Fernanda - 2010

politicians, both with theory and data. The theory is based on a version of the career concerns model of political agency with … implications of the theory and identify the causal effect of larger federal transfers on political corruption and the observed … features of political candidates at the municipal level. In accordance with the predictions of the theory, we find that larger …

Persistent link: https://www.econbiz.de/10013148374

Political Economics and Macroeconomic Policy

Persson, Torsten; Tabellini, Guido - 2022

This paper surveys the recent literature on the theory of macroeconomic policy. We study the effect of various …

Persistent link: https://www.econbiz.de/10013323999

Is Inequality Harmful for Growth? Theory and Evidence

Persson, Torsten; Tabellini, Guido - 2021

Is inequality harmful for growth? We suggest that it is. To summarize our main argument: in a society where distributional conflict is more important, political decisions are more likely to produce economic policies that allow private individuals to appropriate less of the returns to growth...

Persistent link: https://www.econbiz.de/10013230194

Optimal Fiscal and Monetary Policy

Chari, Varadarajan V.; Kehoe, Patrick J. - 2021

We provide an introduction to optimal fiscal and monetary policy using the primal approach to optimal taxation. We use this approach to address how fiscal and monetary policy should be set over the long run and over the business cycle. We find four substantive lessons for policymaking: Capital...

Persistent link: https://www.econbiz.de/10013230363

Political Economics and Public Finance

Persson, Torsten; Tabellini, Guido - 2021

Observed fiscal policy varies greatly across time and countries. How can we explain this variation across time and countries? This paper surveys the recent literature that has tried to answer this question. We adopt a unified approach in portraying public policy as the equilibrium outcome of an...

Persistent link: https://www.econbiz.de/10013226917