What accounts for the existence of positive energy taxes in the US, given that such taxes are regressive and that the income distribution is skewed to the right? The traditional majority-voting equilibrium approach suggests a subsidy; thus we also look at two alternatives. These are the...

We consider the properties of a computable equilibrium model of a competitive polical economy in which the economic interests of groups of voters and their effective influcence on equilibrium policy outcomes can be explicitely distinguished and computed.

In 2001 the Italian government introduced a personal income tax reform to be implemented in successive phases. In 2004 taxes were reduced to all income levels with higher gains for low-income and high-income individuals than for middle-income ones. A large debate arised. This paper explores the...

The pairwise lottery system is a multiple round voting procedure which chooses by lot a winner from a pair of alternatives to advance to the next round where in each round the odds of selection are based on each alternative’s majority rule votes. We develop a framework for determining the...

We analyze the effect of the projected demographic transition on the political support for social security, and equilibrium outcomes. Embedding a probabilistic-voting setup of electoral competition in the Diamond (1965) OLG model, we find that intergenerational transfers arise in the absence of...

This paper presents a political economy model of inflation as a result of social conflict. Agents are heterogeneous in terms of income. Agents' income levels determine their ability to hedge against the effects of inflation. The interaction of heterogeneous cash holdings and preferences over...

We explore the nature of tax complexity in competitive political systems. The analysis does not rely upon imperfections in the operation of the public sector. Complexity arises in the course of the struggle for office, during which political parties are induced to propose platforms that...

This paper analyzes the sustainability of intergenerational transfers in politico-economic equilibrium. We argue that this transfers arise naturally in a Markow perfect equilibrium in the fundamental state variables. In contrast to earlier literature, our explanation does not resort to altruism,...

The governments of nearly all countries are major providers of primary and secondary education to their citizens. In some countries, however, public schools coexist with private schools, while in others the government is the sole provider of education. In this study, we ask why different...

This paper examines causes of the persistence of corruption among elected politicians in democracies. We study a theoretical model of competition between two candidates who differ both in ability and popularity in a probabilistic voting setup. Each candidate proposes a tax rate and a public good...