We develop a Ramsey type model of economic growth in which the "Engine of Growth" is public capital accumulation. Public capital is a public good, and is financed by taxes on private output. The government may either use the taxes gathered to fund public capital accumulation or consume the...

We explore worldwide foreign direct investment location decisions by Japanese manufacturing firms from 1985 through 1991. Our conditional logit estimates provide evidence that firms’ location decisions are affected by membership in either vertical or horizontal keiretsu. Consistent with...

Several empirical studies have found a negative relationship between corruption and the decentralization of the powers to tax and spend. In this paper we explain this phenomenon using a model of Yardstick Competition. Using data on federal corruption-related convictions in U.S. states we propose...

We construct a market based mechanism that induces players in a non-cooperative game to make the same choices as characterize cooperation. We then argue that this mechanism is applicable to a wide range of economic questions and illustrate this claim using the problems of "The Tragedy of the...

In this paper we combine AcemogluÂ’s model of the economic origins of democracy with LohmannÂ’s model of political massprotest. This alllows us to provide ananalysis of the economic causes of political regimec hange based on the micro foundations of rebellion. We are able tod erive...

We develop a dynamic model of the exploitation of an environmental resource with endogenous property rights. We are able to explain both the evolution of property rights and environmental quality. In some circumstances the time path of environmental quality is U-shaped and resembles an...

Tax incentives offered to attract firms engaged in foreign direct investment are often tied to performance requirements such as domestic content restrictions. The tax competition literature has repeatedly shown that competition between municipalities for mobile firms tends to drive taxes to low...