One of the most striking macroeconomic developments during the last three decades is the rise and persistence of large fiscal deficits in a number of countries. Despite recent major fiscal reforms around the world, many countries suffer from recurrent large fiscal imbalances that often reflect...

We construct an overlapping generations model in which parents vote on the tax rate that determines publicly provided education and offspring choose their effort in learning activities. The technology governing the accumulation of human capital allows these decisions to be strategic complements....