A main question regarding public finance is how well democratic institutions align the interest of voters and the incentives of self-interested politicians. It has been observed that fiscal policy reflects any incentive present in political institutions. In this paper we summarize a recent line...

This paper develops a model of the breakup or unification of nations. In each nation the decision to separate is taken by majority voting. A basic trade-off between the efficiency gains of unification and the costs in terms of loss of control on political decisions is highlighted. The model...