Empirical cross-country evidence suggests that countries position themselves along a sort of Market Regulation (MR)-Social Expenditure (SE) trade-off “line”. Theoretically, it is clear that there exists a certain degree of substitutability between SE and MR, since both can provide a cushion...

In cases where policy makers accept "bribes" offered by organised lobbies or interested parties, the government decisions can be modelled as a first price menu auction. In this paper we adapt this structure to model debt repudiation. We consider a one-period model where two generations are...