We develop and test a theory of efficient international trade. Efficiency gains arise through lower trade costs faced by 'trade specialists', whose superiority over 'common traders' manifests itself through lower trade costs. To test our theory, we construct and deploy a novel dataset based on...

Recent empirical work has established that 'democracy causes growth'. In this paper, we determine the underlying institutions which drive this relationship using data from the Varieties of Democracy project. We sketch how incentives and opportunities as well as the distribution of political...

Previous research has established a link between democratic governance and sustainable economic growth. Yet, over the past decade, we have witnessed a global decline of democratic institutions across a wide range of political contexts. How has this erosion of democracy affected countries'...

Fiscal policymakers are expected to conduct countercyclical policies to mitigate cyclical fluctuations of output, but the assessment of cyclical conditions in real time is subject to considerable uncertainty. They face two types of risk: (i) launching discretionary measures to support or dampen...

In 2012, 22 EU countries signed the Fiscal Compact, an intergovernmental agreement aimed at backing EU fiscal rules with national arrangements. The main objective of the Compact was to strengthen compliance. Based on a survey of national independent fiscal institutions, we take a closer look at...