We study which policy tool and at what level would be chosen by majority voting to reduce negative externalities, such as pollution. We consider three instruments: a rule, that sets an upper limit to the polluting activity, a quota that obliges to proportional reduction, and a tax on the...

We study which policy tool and at what level a majority chooses in order to reduce activities with negative externalities. We consider three instruments: a rule, that sets an upper limit to the activity which produces the negative externality, a quota that forces a proportional reduction of the...

Sanctions induce political instability. We present a model where sanctioned regimes may decide to repudiate their public debts in order to keep internal support. To be effective, this strategy requires the share of foreign debt to be larger than the minimum quota of population which is needed...

In this paper bank bailout rules and central bank independence (CBI) are determined by majority voting. The failure of a bank is socially costly, since bailouts are financed by distortionary taxation. The tax distortion can be reduced via monetization, i.e. lowering CBI; but monetization causes...

This paper examines myopic, populist policies that guarantee short-term financial protection of the people from the elite without regard for long-term fiscal or monetary distortions. Assuming that citizens are financially heterogeneous, this paper shows that inefficient outcomes can arise when...