Fiscal restraints have been argued to force today's governments to internalize the externalities that result from extensive borrowing on future electorates and governments as well as on other countries by causing fiscal instability. In this article we provide an alternative argument for fiscal...

Fiscal restraints have been argued to force today's governments to internalize the externalities that result from extensive borrowing on future electorates and governments as well as on other countries by causing fiscal instability. In this article we provide an alternative argument for fiscal...

This article reviews a rapidly growing literature on how climatic risks and events affect public finances around the world. This literature includes empirical evaluations of how past climatic events have affected fiscal outcomes, empirical and model-based assessments of how climatic risks affect...

Elected representatives have little incentive to pursue the interests of those electing them once they are elected. This well-known principle-agent problem leads, in a variety of theories of government, to non-optimally large levels of government expenditure. An implication is that budgetary...

Devolving tax authority to lower-level jurisdictions in a federation is often argued to better align the actions of politicians with the wishes of voters. In this paper, we derive the conditions for tax autonomy to bring about local growth-enhancing policies - as the fiscal incentives approach...

Fiscal rules, i.e., constraints to the policymaking discretion of elected officials, are widely used tools to regulate fiscal policies. We build a simple model that combines fiscal rules with endogenous entry into politics, showing how fiscal rules can negatively affect the quality (in terms of...

Fiscal rules, i.e., constraints to the policymaking discretion of elected officials in terms of deficit and expenditures, are widely used tools to regulate fiscal policies. This paper shows that they can negatively affect the quality of candidates willing to run for office. We build a simple...

What explains subnational policy choices over tax cut after decentralization? We test two different explanations in the context of the 2002 tax reform in Russia. A popular strand of literature suggests that decentralization induces more regional competition over investment, motivating...

Does politician quality matter for policy in representative governments? I use administrative registry data on local politicians in Finland and exploit exogenous variation generated by close electoral races that shift the quality composition of local councils to show that (i) electing more...