We analyze a sequential game between two symmetric countries when firms can invest in a multinational structure that confers tax savings. Governments are able to commit to long-run tax discrimination policies before firms’ decisions are made and before statutory capital tax rates are chosen...

It is now generally agreed that the prediction of long-run development has to include natural resource use. To focus on the long run is, however, not equivalent to the use of balanced growth assumptions. It should be kept in mind that reaching a long-run equilibrium might take considerable time....

One of the stylized facts of unfunded social security programs is that programs are larger in size, measured relative to the GDP, the tighter the link between pension claims and past earnings. We provide a political economy explanation of this stylized fact in a median voter model, where people...

New trade theory models predict that freer trade increases the spatial concentration of industrial production across countries. While nations with large home markets and central geographical location become increasingly attractive business locations, small peripheral countries gradually...

This Policy Briefing examines how Europe’s corporations are changing the way they do business since the 2004 EU Enlargement. Dalia Marin argues that firms are adapting to heightening global competition by shifting decision-making processes. The author gives policy recommendations in the areas...

Globalization has had an enormous impact on traditional industrial structures. It almost seems that everything is everywhere the same. And yet, in reality, some regions in a single industrialized country enjoy rapid economic growth while others are downsizing or stagnating. Thus there must be...

Using cross-country data, we find evidence for a significant interaction effect between democracy and equality in determining the quality of growth-promoting institutions like rule of law. Democracy is associated with better rule of law when inequality is lower.

We study the social interaction of non-smokers and smokers as a sequential game, incorporating insights from social psychology and experimental economics into an economic model. Social norms affect human behavior such that non-smokers do not ask smokers in their midst to stop smoking, even...