We examine the economic justification for providing investment subsidies to foreign-owned multinationals. These provide employment opportunities and generate demand for domestic intermediate inputs, produced by domestic workers with increasing returns to scale. Offering subsidies to...

The incidence of money laundering, and the zeal with which international anti-money laundering (AML) policy is pursued, varies significantly from country to country, region to region. There are, however, quite substantial social costs associated with a policy of toleration, and this begs the...

We construct a simple model of fiscal competition taking `rent-seeking' behavior of local governments into account and estimate a policy reaction function based on the model. We consider the scale of public input as each local government's policy tool. Local autonomies' method of seeking central...

Radically new technology offers the prospect of a New and high productivity Economy for the industrially advanced economies. These opportunities are rapidly taken advantage of by innovative firms operating across national borders. Rapid globalization, therefore, makes the regional dimension of...

Divided government is often thought of as causing legislative deadlock. I investigate the link between divided government and economic reforms using a novel data set on welfare reforms in US states between 1978 and 2010. Panel data regressions show that under divided government a US state is...

This paper studies policy competition for foreign direct investment between host and home countries. Three results have been obtained. First, policy competition does not change the attractiveness of any country as a location for investment. Second, as a result, policy competition does not change...

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In this paper, we provide an explanation of why privatization may attract foreign investors willing to enter a regional market. Privatization turns the formerly-public firm into a less aggressive competitor since prot-maximizing output is lower than the welfaremaximizing one. The drawback is...