This paper focuses on the relationship between political instability, policy-making and macroeconomic outcomes. The theoretical section explores various models that explain the effect of instability (and political uncertainty) on growth, budget formation, inflation and monetary policy. The...

This paper analyzes the effects of budget deficits on consumption when individual taxes are stochastic. It is shown that the co-movements between budget deficits and private consumption will depend on how risk averse individuals are. In the case of lump-sum taxes, it is sufficient to assume that...