This paper investigates the political economy of taxation and growth in a model in which individuals have preference for high levels of relative consumption. A pivotal voter determines the equilibrium tax on capital, the revenues from which fund the provision of productive public goods. The...

This paper considers the merits of two classes of profit maximization problems, those involving perfectly competitive firms with quadratic and cubic cost functions. While relatively easy to develop and solve, problems in which the firm has a quadratic cost functions are structurally too simple...

After a decade of research, the effect of inequality on long-run economic growth remains unresolved, in part because researchers have treated omitted variable bias as an estimation problem rather than a deeper question of causality. In this article we argue that the key omitted variable is the...

This paper develops a dynamic, general equilibrium model of specialization-driven growth in which private coordination costs are decreasing in public expenditure on physical and institutional infrastructure. The model provides an explicitly economic explanation of the secular rise of government....