This paper analyzes optimal re-election bars when incumbents gain socially valuable experience in office. We develop a two-period model in which the output of a public good depends on an office-holder's effort, ability and experience. When campaigning for election to an open seat in the first...

We examine optimal procedures for public project provision, financing, and redistribution in democracy. We consider a large and heterogeneous decision body and show that first-best outcomes are obtained by a procedure that involves two proposal-making rounds, the right of the minority to move...

Evidence suggests that banks tend to lend a lot during booms, and very little during recessions. We propose a simple explanation for this phenomenon. We show that, instead of dampening productivity shocks, the banking sector tends to exacerbate them, leading to excessive fluctuations of credit,...

We study a two-period model of committee decision-making where members differ in their levels of efficiency. They may acquire costly information that enhances their ability to make a correct decision. We focus on the impact of transparency. We show that the principal's initial utility is higher...

We examine the macroeconomic consequences of industry wage-bargaining and product market reforms. We suggest that general equilibrium effects may be important for the evaluation of industry-specific regulations. In particular, we suggest that the European unemployment problem can be traced back...

This paper studies the question to what extent premia for macroeconomic risks in banking are sufficient to avoid banking crises. We investigate a competitive banking system embedded in an overlapping generation model subject to repeated macroeconomic shocks. We show that even if banks fully...

We examine the legislative game with open rules proposed by Baron and Ferejohn (1989). We first show that the three-group equilibrium suggested by Baron and Ferejohn does not always obtain. Second, we characterize the set of stationary equilibria for simple and super majority rules. Such...

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

We investigate the question of whether sophistication in risk management fosters banking stability. We compare a simple banking system in which an average rating is used with a sophisticated banking system in which banks are able to assess the default risk of entrepreneurs individually. Both...

In this paper we introduce vote-share contracts. Such contracts contain a vote-share threshold that incumbents must reach in order to be reelected. In a simple model, we illustrate the working of vote-share contracts. Such vote-share contracts curb socially detrimental incumbency advantages by...