This paper successfully tests on a sample of 71 countries for the period 1960–85 the following hypotheses. Income inequality, by fuelling social discontent, increases sociopolitical instability. The latter, by creating uncertainty in the politico-economic environment, reduces investment....

This paper evaluates the effects of fiscal policy on investment using a panel of OECD countries. We find a sizeable negative effect of public spending--and in particular of its wage component--on profits and on business investment. This result is consistent with different theoretical models in...

Around the world one observes a tendency toward political separatism. The economic literature generally (but not always) emphasizes several benefits of large fiscal (and, therefore, political) jurisdictions. In this paper we discuss several politico-economic arguments which reconcile this...

In all industrial countries, fiscal policy is increasingly about redistribution. In this paper, we study redistribution across different types of agents in a world characterized by the presence of labor unions and distortionary taxation. We show that an increase in transfers financed by...

This paper evaluates the effects of fiscal policy on investment using a panel of OECD countries. We find a sizeable negative effect of public spending—and in particular of its wage component— on profits and on business investment. This result is consistent with different...

A fiscal programme that redistributes income from rich to poor individuals indirectly redistributes tax revenues from regions hit by a favourable shock to regions hit by an unfavourable one. Centralised fiscal redistribution has therefore been advocated as a way to insure individuals against...

In several countries policymakers are striving to improve the budget balance. Trivially, this can be done by raising taxes and/or cutting expenditures. But the two strategies are not equivalent. In this paper, we investigate several issues referring to the relationship between the fiscal stance,...

A fiscal program that redistributes income from rich to poor individuals indirectly redistributes tax revenues from regions hit by a favorable shock to regions hit by an unfavorable one. Centralized fiscal redistribution has therefore been advocated as a way to insure individuals against...