Recent theoretical literature related high public debt to the presence of rent-seeking activities by the government (Bataglini and Coate, 2008, Yared, 2010). This paper tests the hypothesis that higher public corruption leads to higher public debt using a panel of OECD countries. The estimates,...

This paper compares the stochastic behavior of fiscal variables under optimal fiscal policy for the cases of full commitment (Ramsey problem) and partial commitment by the government (focusing on differentiable Markov perfect equilibrium). It shows that, around the steady state, the properties...