A coastal city can either dispose of recycled effluent by dumping it in the sea, or transfer it to farmers in its hinterland for irrigation. Who should bear the cost of recycling? Three alternatives are employed: a central planner who maximizes the combined utility of city and farmers;...

In this article, we consider the optimal fiscal strategy of a government interested in maximizing expected social welfare in the face of a potential future security threat. While the common wisdom is that countries facing security threats should seek to bolster their fiscal position in order...

Intuitively, we would expect that an increase in the military preparations of potential enemies imply that the rival perceives an increase in the likelihood of future conflict. In this paper, we present a simple model that suggests that, surprisingly, the relationship is ambiguous. We find that...