Employing the canonical political agency model, this Paper studies the incentives of the government to provide high-quality services by reducing corruption. Acting as a principal in a moral hazard framework, the public disciplines the incumbent by replacing him if the generated output is...

The Paper examines the time sequencing of UI benefits in a general equilibrium framework, with random matching and endogenously determined wages. A key feature of the model is that policymakers exploit random matching to produce some assortative matching through UI policy. The Paper considers a...

Like any trade activity, migration tends to generate gains to all parties involved - the migrants as well as the native-born population. With a mal-functioning labour market, however, migration will exacerbate the imperfections in the market. Consequently, it may lead to losses to the...

We develop a stylized EU-type model of a union consisting of rich, capital-abundant and productive, countries, and poor,capital-scarce and low productivity, countries, in order to explain key features of tax policies and inter- and intra-migration flows. Our purpose is to explain the differences...

Over the years, there emerged two key policy differences between Europe and America, both welfare and migration-states. The former has more generous welfare state and more liberal migration policies than the latter. In this paper we attempt to provide a political-economy explanation for these...

We develop a dynamic political-economic theory of welfare state and immigration policies, featuring three distinct voting groups: skilled workers, unskilled workers, and old retirees. The essence of inter - and intra-generational redistribution of a typical welfare system is captured with a...

We develop a simple information-based model of FDI flows in which the abundance of intangible capital in the source countries, which generates expertise in cream-skimming investment projects in the host countries and enhances FDI flows. Corporate transparency in the host countries, on the other...

Data for the United States and countries in Western Europe indicate a negative correlation between the dependency ratio and labour tax rates and the generosity of social transfers, after controlling for other factors that influence the size of the welfare state. This is despite the increased...

We develop a stylised model of multiple equilibria, with country risk spreads at the focus of the analysis. Fears that the country default on its debt triggers a reversal in the direction of inflows of international financial capital raise interest-rate spreads and thus the cost of servicing the...

This paper brings out the special mechanism through which taxes influence bilateral FDI, when investment decisions are two-fold in the presence of fixed setup flows costs. For each pair of source-host countries, there is a set of factors determining whether aggregate FDI flows will occur at all,...