In this paper we examine the impact of tax contracts as a novel institution on elections, policies, and welfare. We consider a political game in which three parties compete to form the government. Parties have policy preferences about the level of public-good provision and benefit from perks...

Many efficient policies imply a temporary deterioration of GDP while the benefits accrue to voters later. Such policies have a down-up characteristic. We show that voters cannot motivate politicians to invest in down-up policies by their reelection decision. The incumbent either undertakes...

We consider a model with a politician facing a multi-task problem while in office. The reelection mechanism distorts the allocation of effort in favor of tasks whose outcomes can be measured more precisely than others. We show that a hierarchy of elections and incentive contracts can alleviate...