The large wealth and consumption inequality in the U.S. is usually attributed to two market frictions: debt constraints and incomplete markets. Recent literature has argued that debt constraints are the critical friction while market incompleteness plays only a secondary role. We evaluate the...

This paper investigates the quantitative importance of different savings motives on the distributions of wealth and consumption and aggregate capital accumulation by solving an overlapping generations model with intragenerational heterogeneity. Agents differ in age, ability, earnings shocks, and...

We study the value of commitment in contests and tournaments when there are costs for the follower to observe the leader's behavior. In a contest, the follower can pay to observe the leader's effort but cannot observe the effectiveness of that effort. In a tournament, the follower can pay to...

Brennan and Hamlin (2002) note that expressive voting still holds at the constitutional phase. The argument, when taken to its necessary conclusion, proves quite problematic for Constitutional Political Economy. Veil mechanisms following Buchanan induce expressive voting at the constitutional...

In order to analyze conflict and cooperation between a State and a non ruling group in a general equilibrium, I unite pure rent-seeking models and economic models of conflict under an assumption of incomplete property rights. I show that a unique and globally stable Nash equilibrium exists in...

This work is a contribution to the Second Generation Theory (SGT) of fiscal federalism that studies fiscal federalism through contemporary economic and industrial organization theory. First, it establishes context by introducing the two classic motivations in support of federalism, namely,...

This paper analyzes a simple model that captures the relationship between institutional quality, the shadow economy and corruption. It shows that an improvement in institutional quality reduces the shadow economy and affects the corruption market. The exact relationship between corruption and...

The causes and consequences of corruption have attracted much attention in recent years by both academics and policy makers. Central in the discussion on the impact of corruption are perception-based indices. While informative, these indices are ordinal in nature and hence provide no indication...

TResearch by J.D. Sachs and A.M. Warner, indicates that resource-rich countries are less successful in terms of economic growth than are resource-poor countries. The question of what measures Icelanders need to take to prevent their fishery wealth from limiting economic growth is posed. The main...

This paper examines why some transitions are more successful than others by focusing attention on the role of productive, protective and predatory behaviors from the perspective of the new institutional economics. Many transition economies are characterized by a fundamental inconsistency between...