We investigate the structure of interactions among countries exercising voluntary uncoordinated choice but sharing a common "risk profile" --- a vector comprised of chance of adversity/emergency and magnitude of loss under adversity/emergency. We use the term "emergency costs" to refer to the...

This paper investigates how the soft budget constraint with grants from the central government to local governments tends to exaggerate inefficient local expenditures. We first develop a theoretical model, which explains soft budget problem in a multi-government setting. We then show that in...

This paper investigates dynamic properties of fiscal reconstruction by analysing the infinite duration dynamic game among various interest groups with a framework of voluntary acceptance of tax burden. By comparing the first best solution, the open-loop solution under enforceable commitments,...

This paper develops a model of economic protection against random emergency costs. To mitigate the effects of these disruptions, each country creates a private mutual insurance market and provides voluntarily an international public good. We will explore how protection through voluntary...

This paper considers a tax competition model in which regional government activities include income redistribution as well as public good provision. To incorporate the regional government function of income redistribution, we extend the tax system from the stylized proportional capital income...

This paper concerns self-insurance and self-protection that countries may implement at a national level in pursuit of their security. The distinctions self-insurance, self-protection, and market insurance were first made by Ehrlich and Becker (1972). Nevertheless, extension of their models to...

This paper investigates the implications of cooperative and non-cooperative defense spending of allied countries in conflicting blocs using static and leader-follower game models. It is well known that in the three-country world with two allies and an adversary all countries may be worse off...

This paper investigates the effect of wealth taxation on economic growth using an endogenous growth model with the altruistic bequest motive. We introduce intragenerational productivity differentials of human capital formation, resulting in differences of growth rates among individuals. The...

This paper investigates how the soft budget constraint with grants from the central government to local governments tends to internalize the vertical externality by stimulating insufficient local expenditure when both the central and local governments impose taxes on the same economic activities...

We investigate the efficiency of disaggregated public capital provision for the Japanese economy. We estimate the optimality conditions based on simultaneous Euler equations by using GMM. Our results suggest that public capital productivities have been relatively high and divergent among several...