This paper proposes a dynamic politico-economic theory of debt, government finance and expenditure. Agents have … consumption, the less debt is accumulates. We extend the analysis to redistributive policies and political shocks. The theory …

Fiscal decentralization is high on the agenda in policy fora. This paper empirically investigates the underlying causes … of fiscal decentralization, based on the predictions of a simple political economy model. We argue that the likeliness …, the theory's main insight being that the central government's electoral strength should, all else being equal, decrease …