We study the pass-through of indirect taxes on beer prices in the European Union (EU). Exploiting the variation of value added tax rates, beer excise tax rates, and beer prices in a panel of monthly data from 1996 to 2016 of all current 28 EU member states, we estimate the tax pass-through of...

Restrictions on work hours are more important in countries with a large welfare state. We show that this empirical observation is consistent with the strategic effects of such restrictions in a welfare state in the context of optimal direct taxation in the tradition of Mirrlees (1971). Our...

High employment protection in the public sector results in strategic over-employment if government divisions compete for budgets in a dynamic setting. Bureaucrats who are interested in maximising their divisions' output employ excess labor, since this induces the sponsor to provide complementary...

This study analyzes the interaction between distorted election choices and the architecture of government with a focus on the implications for the accountability of politicians. Contrasting centralized with decentralized political systems, it is shown that centralization is likely to result in...

Random factors such as bad weather or exogenous economic shocks affect the re-election of politicians and can reduce accountability. Such distorted election choices interact with the architecture of government. Contrasting centralized with decentralized political systems, this study shows that...

Globalization of economic activities and decentralization of government organization are occurring simultaneously. We consider the implications of government decentralization for intra-national and international trade. Decentralization can create barriers to intra-national trade, but can make...

We study how regional productivity differences and labor mobility shape optimal Mirrleesian tax-transfer schemes. When tax schedules are not allowed to differ across regions, productivity-enhancing inter-regional migration exerts a downward pressure on optimal marginal tax rates. When regionally...

A global monopoly supplier country of necessary inputs for the provision of global public goods has an incentive to subsidize these exports. The strategic interdependence in the global public good context reverses the "large country" incentives to manipulate the terms-of-trade. It is optimal for...

We study the strategic incentives of regional governments to allocate their budget to public investment and to public consumption expenditures against the background of an incentive-compatible redistribution policy set by the central government. Regional investment changes the productivity...