This paper proposes a dynamic politico-economic theory of fiscal policy in a world comprising a set of small open economies, whose driving force is the intergenerational conflict over debt, taxes, and public goods. Subsequent generations of voters choose fiscal policy through repeated elections....

This Paper provides an analytical characterization of Markov perfect equilibria in a model with repeated majority voting, where agents vote over income redistribution. The key feature of the theory is that the future constituency of redistributive policies depends positively on the current level...

This Paper analyses an overlapping generation model of public good provision under repeated voting. The public good is financed through age-dependent taxation that distorts human capital investment. Taxes redistribute income both across different skill groups and across generations. We contrast...

This Paper tackles the issue of international fiscal coordination in a world where markets are integrated but national governments are sovereign. The consequences of capital market liberalization to national fiscal policies and possible remedies to resulting inefficiencies are analysed. A...

We study the international monetary policy design problem within an optimizing two-country sticky price model, where each country faces a short run trade-off between output and inflation. The model is sufficiently tractable to solve analytically. We find that in the Nash equilibrium, the policy...

The paper formulates a model of wage determination in which the firm decides on employment after a monopoly union has determined wages. The novelty is to incorporate investment and capital decisions by firms. The subgame-perfect Nash equilibrium and its comparative statics for wages, capital...

We find the Nash equilibria for monotone n-player symmetric games where each player chooses whether to participate. Examples include market entry games, coordination games, and the bar-room game depicted in the movie 'A Beautiful Mind'. The symmetric Nash equilibrium involves excessive...

It has been recognized that the optimal strategy of a government is generally time-inconsistent: optimality requires that the government take into account expectations effects in the formulation of its policy and to ignore these effects when applying the policy. In order to analyse the problem,...

We examine regulation as a repeated game between a regulator and a utility facing a Markovian sequence of demands. Sunk capital would be expropriated by a regulator concerned only with the short-run interests of consumers. There exist rate of return regulatory policies supporting efficient...

A two-country dynamic general-equilibrium model with imperfect competition and price stickiness is considered. This work shows the conditions under which price stability can implement the flexible-price allocation as a Nash equilibrium. This is possible if and only if both countries maintain a...