The political economy literature highlights the redistribution of resources to political support groups - often along regional or ethnic lines - as a dominant feature of political systems. Against this assumption, Kasara (2007) documents a puzzling result of discriminatory rent extraction by...

The political economy literature highlights the redistribution of resources to political support groups – often along regional or ethnic lines – as a dominant feature of political systems. Against this assumption, Kasara (2007) documents a puzzling result of discriminatory rent extraction by...

Empirical evidence shows that developed countries use income or consumption taxes to generate tax revenue, of which they transfer a certain fraction as aid to less developed countries. This paper constructs a two-country general equilibrium trade model that takes into account these realities,...