This study explores the manner in which the availability of natural resources wealth, foreign aid or corruption potential constrains institutional improvements. By providing a framework, where rulers, bureaucracy and the citizens act endogenously, we show that the rents from these resources can...

We present a simple model, illustrating how democracy may improve the quality of the economic institutions. The model further suggests that institutional quality varies more across autocracies than across democracy and that the positive effect of democracies on economic institutional quality...

This paper uses a search theoretic framework with reputation building to consider the role that intermediaries play in corruption. Overall, intermediation in corruption acts as an income redistribution mechanism that transfers value from bureaucrats and entrepreneurs to intermediaries....

The soccer referee stands in for a judge. Soccer’s Video Assistant Referee (“VAR”) system stands in for algorithms that augment human deciders. Fair play stands in for justice. They are combined and set in a polycentric system of governance, with implications for designing, administering,...

We investigate the complementarity between informal communities and formal government enforcement of norms of reciprocation and exchange. We introduce a model in which people exchange informally within their community as well as externally on a market. We show that informal community and formal...

We find that, in democratic regimes with unlimited reelection, the answer to the question posed above is in the affirmative, contrasting a widely held view. The reason is that resource windfalls increase future graft prospects, motivating opportunistic incumbents to postpone their planned...

We present a simple model, illustrating how democracy may improve the quality of the economic institutions. The model further suggests that institutional quality varies more across autocracies than across democracy and that the positive effect of democracies on economic institutional quality...

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,...

I consider a two-period model in which being "too big" is only a necessary condition for an insolvent firm to receive a government bailout because, in addition to meeting a threshold asset size, the firm must engage in a lobbying contest in order to be bailed out. The firm has a political...

This paper argues that the traditional social contract that underlies the free market economy has run its course and needs to be replaced by a new contract, based on a new conception of the “empowering economy.” Whereas different social contracts are relevant to different societies, all...