The authors extend the "rational partisan" model of inflation to allow for the effects of unemployment persistence on the dynamics of inflation. The authors combine this model with the "exchange-rate-regime" model of inflation, and examine the experience of the United Kingdom. Outside the fixed...

In this paper we study the link between elections, fiscal policy and aggregate fluctuations. The set-up is a stylized dynamic stochastic general equilibrium model incorporating both technology and political re-election shocks. The later are incorporated via a two-party model with elections. The...

In this paper we study the link between elections, fiscal policy and economic growth/fluctuations. The set-up is a dynamic stochastic general equilibrium model of growth and endogenously chosen fiscal policy, in which two political parties can alternate in power. The party in office chooses...

The paper presents a version of the exchange-rate-regime model of inflation. Quarterly data from Mexico from 1946 to 1995 are used to estimate and test a simultaneous-equation model for wage inflation, price inflation and industrial production, taking account of the Lucas critique and the...

We reconsider the conventional wisdom that, in the presence of public goods and distortionary taxation, Nash tax rates are inefficiently low due to free riding. We use a model in which the public good is natural resources. Specifically, a general equilibrium model of a world economy, in which...

This paper investigates optimal external borrowing in an open economy that faces an imperfect world capital market. As the country expands its indebtness, it must pay higher real interest rates. The focus on the role of interest rates is justified by the fact that they have increased the...

In this paper, we quantitatively assess the welfare implications of alternative public education spending rules. To this end, we employ a dynamic stochastic general equilibrium model in which human capital externalities and public education expenditures, financed by distort- ing taxes, enhance...