We examine whether democratic societies can escape poverty traps. Unrestricted agenda setting with simple majority rules fail to educate a society, because education-enhancing redistribution will not occur. We show that a combination of suitable constitutional rules overcomes this impossibility...

Vote-buying is widely used by parties in developing countries to influence the outcome of elections. We examine the impact of vote-buying on growth. We consider a model with a poverty trap where redistribution can promote growth. We show that vote-buying contributes to the persistence of poverty...

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...

We examine the provision of public projects under separate tax and subsidy rules. We find that tax rules separated from project cum subsidy decisions exhibit several advantages when incentive problems of the agenda-setter are taken into account. In particular, tax rules may prevent the proposal...

We examine optimal democratic procedures for public project provision, financing, and redistribution, and provide a game-theoretic foundation of how to channel the say in politics. We consider a large and heterogeneous political decision body and show that first-best outcomes are obtained by a...

We explore democratic currency issuance with flexible majority rules. With flexible majority rules, the vote-share needed to approve a particular currency issuance growth is increasing with this growth rate. By choosing suitable flexible majority rules, socially optimal growth rates can be...

We study how to efficiently motivate policy-makers to solve political multitask problems. Political multi-task problems typically have outcomes that are difficult to measure. Moreover, there are conflicts among citizens about optimal policies and the agents have the power to tax the citizens to...

We propose a flexible majority rule for central-bank councils where the size of the majority depends monotonically on the change in interest rate within a particular time frame. Small changes in interest rate require a small share of supporting votes, even less than 50%. We show that flexible...

We analyze the optimal length of political terms (equivalently, the optimal frequency with which elections should be held) when the candidates of two polarized parties compete for office and the median voter shifts over time. Office-holders determine policy and experience persistent random...

We consider an infinite-horizon model of elections where policy changes are costly for citizens and parties. The so-called costs of change increase with the extent of the policy shift and make policy history-dependent. First, we provide a detailed description of the equilibrium dynamics and...