This paper tests for political agency effects, that is, whether governments that were ex post re-elected performed better than those who were replaced, and whether re-elected governments performed better than newly elected ones. As a testing ground, I use Swedish local governments which offer a...

We analyze investment decisions when information is costly, with and without delegation to an agent. We use a rational-inattention model and compare it with a canonical signal-extraction model. We identify three "investment conditions". In "sour" conditions, no information is acquired and no...

In this paper, we analyze how a weighted voting system introduced in 1862, which shifted the distribution of political power from landowners to industrialists at local town meetings, affected investments in local public education. We use an event study design based on a newly constructed panel...

This paper empirically tests whether the soft budget constraint is caused by a dynamic commitment problem, i.e., the inability of a supporting organization to commit itself not to extend more resources ex post to a budget-constrained organization than it was prepared to provide ex ante. It uses...