We analyze the democratic politics of a rule that separates capital and ordinary account budgets and allows the government to issue debt only to finance capital items. Many national governments followed this rule in the 18th and 19th centuries and most US states do so today. Despite its...

In Bassetto with Sargent (2004) and Bassetto and Lepetyuk (2007), I developed a model that can be used to quantitatively assess the consequences of departures from Ricardian equivalence on the mix of public goods provided by the government. Those papers assume that mobility is exogenous and that...

economy friction, posing a further challenge.

This paper considers the existence of bad equilibria in a random auditing tax model with limits on the number of households which can be audited. Specifically, we present sufficient conditions for a tax-audit mechanism which has truth telling as one equilibrium to have other equilibiria in which...

We study a simple model of production, accumulation, and redistribution, where agents are heterogeneous in their initial wealth, and a sequence of redistributive tax rates is voted upon. Though the policy is infinite-dimensional, we prove that a median voter theorem holds if households have...

We study the effects of credit shocks in a model with heterogeneous entrepreneurs, financing constraints, and a realistic firm size distribution. As entrepreneurial firms can grow only slowly in this set-up, we show that, by reducing entrepreneurial firm size, negative shocks have a very...

Until the last couple of years, most central banks around the world conducted monetary policy by setting targets for short-term interest rates. Manoeuvering interest rates as a way to achieve low and stable inflation is now regarded as a success story. Yet this was not always the case. As...