We develop a model of human capital formation with endogenous labour supply and heterogeneous agents to explore the optimal level of education subsidies along with the optimal progressive schedule of the labour income tax and optimal capital income taxes. Subsidies on education ensure efficiency...

We present a simple model to analyse law enforcement problems in transition economies. Law enforcement implies coordination problems and multiplicity of equilibria due to a law abidance and a fiscal externality. We analyse two institutional mechanisms for solving the coordination problem. A...

Approaching demographic shifts are raising concerns about fiscal sustainability in most OECD countries. A widespread view based on the tax-smoothing idea is that a prior consolidation of public finances is required to cope with the predicted trend deterioration in the primary budget balance....

Leaders compensate supporters not just for performing their duties but also in order to preempt an overthrow by the same supporters. We show how succession rules affect the power of leaders relative to supporters as well as the resources expended on possible succession struggles. We compare two...

This paper discusses how electoral politics shapes the regional allocation of public investment expenditures per capita in Greece. Using regional public investment data for 10 political periods (1975-2009), combined with electoral data by constituency, a model is proposed which captures the...

Based on a reconstruction of a weighted index of political unification and a time series of incidences of warfare for the past two millennia, this paper develops a narrative to show that the establishment and consolidation towards a single unitary monopoly of political power in China was an...

People may express their political opinion by adopting different measures of civil disobedience. Tax compliance is an example of an economic decision that may be affected by anti-goverment sentiment. We consider a model in which political opinion as well as tax compliance decisions are both...

What are the cyclical properties of US state and local government fiscal policy? The budget surplus of local and, in particular, state governments is procyclical, smoothing disposable income and consumption of state residents. This happens over both short- and medium-term horizons. Procyclical...

Unemployment in Europe is a worrying phenomenon not so much because it hits 18 million people, but because it almost exclusively affects particular population segments. Italy represents a textbook case of a European country where labour market imbalances only weigh upon certain social...

This Paper analyses the growth and employment effects of the 1994-99 Community Support Framework (CSF) for the Objective 1 Spanish regions, using a simple supply-side model estimated with a panel of regional data. The results suggest that the impact of the Structural Funds in Spain has been...