We model international rivalry between a domestic firm that is going through a leaming-by-doing phase, and a mature foreign rival. We show that the optimal production subsidy for the domestic firm depends on the degree of strategic sophistication of the foreign firm.Optimal production subsidy...

Several authors have shown that the opening of trade may be harmful if natural resources are exploited under the open-access regime. These authors assume that property rights regimes are exogenously given, and are the same before and after the opening of trade. In this paper, we model the...

Buoyant oil prices have allowed oil-producing countries in sub-Saharan Africa (SSA OPCs) to increase oil exports and fiscal revenues, providing them with resources necessary to address the pressing social needs. To preclude another boom-bust cycle, this paper advocates the definition of a fiscal...

While models based on Friedman''s (1957) permanent-income hypothesis can provide oilproducing countries with long-run fiscal targets, they usually abstract from short-run costs associated with consolidation. This paper proposes a model that takes such adjustment costs (or ""habits"") into...

Viewing fiscal policies as the outcome of democratically resolved conflicts of households over public goods and taxes, the “economic model of politics” proposes a public choice approach, which does not rely on social welfare functions. With it, a country’s overall budget can be derived...

During 1996–98, several indicators hinted at the apparent unsustainability of Cape Verde’s exchange rate peg. The country, faced with a considerable backlog of approved but unmet applications for foreign currencies, tolerated a parallel market. Street traders, however, demanded only...

Whereas the economics discipline possesses a highly refined theoretical apparatus to analyze the effects of government behaviour on the economy, it has not (yet) managed to fully develop a positively formulated ""economic theory of politics"" that would permit the integration of the...