This paper offers a new argument for why a more aggressive enforcement of minor offenses ("zero-tolerance") may yield a double dividend in that it reduces both minor offenses and more severe crime. We develop a model of criminal subcultures in which people gain social status among their peers...

This paper offers a new argument for why a more aggressive enforcement of minor offenses ('zero-tolerance') may yield a double dividend in that it reduces both minor offenses and more severe crime. We develop a model of criminal subcultures in which people gain social status among their peers...

If distortions in the labour market lead to inefficiently highunemployment, and policy makers cannot enter into a binding policy commitment before nominal wages are set, excessive inflation may result due to a credibility problem. This is the famous Kydland&Prescott - Barro&Gordon inflationary...

This paper offers an explanation for why policy makers stick to inefficient policy decisions. I argue that repealing a policy is a bad signal to voters about the policy maker's competence if voters do not have complete knowledge about the effects of implemented policies. I derive the optimal...