Economists generally assume that the state has sufffcient institutional capacityto support markets and levy taxes, assumptions which cannot be taken forgranted in many states, neither historcally nor in today’s developing world.Our paper develops a framework where "policy choices" in market...

The absence of state capacities to raise revenue and to supportmarkets is a key factor in explaining the persistence of weak states.This paper reports on an on-going project to investigate the incentiveto invest in such capacities. The paper sets out a simple analyticalstructure in which state...

This paper develops a simple model to analyze how a lack of politi-cal competition may lead to policies that hinder economic growth. Wetest the predictions of the model on panel data for the US states. Inthese data, we …nd robust evidence that lack of political competitionin a state is...

Recent events in several countries have underscored the importanceof good governance in private occupational pension plans. Thepresent paper uses contract theory to analyze the interplay of residualclaims and control rights in private pensions. The residual claimant isthe plan sponsor in a...

How and whether judges should be held accountable is a key issue in the design of a legalsystem. Thirty-seven of the forty-eight continental states use some method of judicial selectionwhich involves a direct role for citizens in selecting or re-appointing the judiciary. We identifytwo...

This paper uses data on elected village councils in South India to examinethe political economy of public resource allocation. We find that the patternof policy-making reflects politicians' self-interest. Elected councillors benefit from improved personal access to public resources. In addition,...

This paper studies determinants of MPs expense claims in Parlia-ment using the data released under the freedom of information act in2004. Using a multiple regression framework, we correlate expenseswith three sets of variables: constituency characteristics, party a¢ l-iation and individual...

This paper develops an approach to political equilibrium in a two-party setting. The approach characterizes political resource allocationas trading o¤ the utility of core party supporters and swing voters,i.e. those who are not attached to either party. The model has threestages. First parties...

This paper explores the consequences of creating and improvingproperty rights so that …xed assets can be used as collateral. Thishas become a cause célèbre of Hernando de Soto whose views areinfluential in debates about policy reform concerning property rights.Hence, we refer to the economic...

This paper uses mortgage data to construct a measure of terms on which households access to externalfinance, and relates it to consumption at both the aggregate and cohort levels. The Household ExternalFinance (HEF) index is based on the spread paid by risky borrowers in the mortgage market....