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...

This Paper studies a principal-agent model of the relationship between officeholder and an electorate, where everyone is initially uninformed about the officeholder’s ability. If office-holder effort and ability interact in the determination of performance in office, then an office-holder has...

This paper studies a principal-agent model of the relationship between an incumbent officeholder and the electorate, where the officeholder is initially uninformed about her ability. If officeholder effort and ability interact in the "production function" that determines performance in office,...

We investigate whether private information about citizens' competence in political office can be revealed by their entry and campaign expenditure decisions. We find that this depends on whether voters and candidates have common or conflicting interests; only in the former case can entry be...

Lebanon’s political development since independence has been influenced primarily by its evolving confessional system. However, this system, originally established to balance the competing interests of local religious communities, is increasingly seen as an impediment to more effective...

The prominent but unproven intuition that preference heterogeneity reduces redistribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance,...

The prominent but unproven intuition that preference heterogeneity reduces redistribution in a standard optimal tax model is shown to hold under the plausible condition that the distribution of preferences for consumption relative to leisure rises, in terms of first-order stochastic dominance,...