In 2001, the U.S. government spent $290 billion on public investments spanning such diverse projects as highways, aircraft electronics, sewer and water systems, government buildings, and conservation. This amount represents roughly 3 percent of GDP and is comparable in size to net exports. The...

Criticisms of endogenous growth models with flat rate taxes have highlighted two features that are not substantiated by the data. These models generally imply: (1) that economic growth must fall with the share of government expenditures in output across countries, and (2) that one-time shifts in...

This paper explores the links among growth, the informal economy, and rent-seeking bureaucracies. The presence of congestion associated with the enforcement of property right implies that informality can be useful. Whether bureaucratic rent-seeking is detrimental to growth then depends on how...