A theory is introduced to systematically explain autocracies' diverse experiences with taxation. State power relative to citizens' capacity for violence determines the limit of taxation, the highest tax rate that citizens will tolerate and pay. Rulers can spend resources on coercion to increase...

This paper analyzes the institutional conditions affecting the establishment and effectiveness of independent central banks and of budgetary institutions. It draws on the recent theory developed by North, Wallis and Weingast on the transition from a closed and fragile state to an open economic...

We consider the problem of finding sufficient conditions for political support of liberal, growth-enhancing policy in a quality-ladders model with heterogeneous agents differing in their endowment of wealth and skills. The policy set is two-dimensional: Agents vote for the level of...

It is not immediately apparent why a state would willingly abolish the death penalty and thereby lose a powerful political instrument. The fact that some states abolish capital punishment while others retain it has thus far been explained by systematic differences in the values of politicians or...

Prohibition of riba (as part of the Riba-Interest equation) is one of the key dimensions of Islamic economics and finance. While it is recognized that riba is a form of unjust and unearned income or gain, the focus on riba is too narrow to capture the wider implications of unearned income or...

Freedom of movement is one of the great issues of our time. Expanding opportunities for both international and internal migration can greatly expand freedom and opportunity for hundreds of millions of people. The same goes for expanding freedom of choice in the private sector. “Voting with...

What explains the emergence and persistence of institutions aimed at preventing any ruling group from using the state apparatus to advance particularistic interests? To answer this recurring question, a burgeoning literature examines the establishment of power-sharing institutions in societies...

This essay accepts the normative vision Richard Epstein sets forth in The Classical Liberal Constitution, but refracts that vision through some considerations of positive political economy. In response to a questioner who asked at the conclusion of the Constitutional Convention what kind of...

Nowadays, it is commonplace to claim that the economy overuses our limited material and energy resources and that this overuse threatens both human society and the biosphere. Other than anti-science cranks, the only ones who seem to deny this claim are mainstream economists. In our view, though,...

This paper reviews the political economy of extractive resources and the associated resources sector governance agenda. The consensus that good sector governance improves the developmental impacts of extractive resources exploitation is premised on the understanding that institutions matter for...