Facing electoral uncertainty, a government chooses its exchange regime in a trade-off among three incentives: (i) tying the hands of its opponent should it lose the election; (ii) facilitating its own future policy implementation should it win the election; and (iii) increasing its chance of...

Conventional wisdom has held that a fixed exchange rate regime induces more fiscal discipline, but Tornell and Velasco (1995, 1998) argue the opposite. Using a dynamic model with fragmented fiscal policymaking, this paper evaluates the two arguments in a single framework and shows that (1)...

Most economists measure labor productivity based on activities conducted at places of work and do not consider leisure time in their calculations. In contrast, psychologists and sociologists argue that leisure has a positive role in the production process: leisure can improve individuals’...

Most economists measure labor productivity based on activities conducted at places of work and do not consider leisure time in their calculations. In contrast, psychologists and sociologists argue that leisure has a positive role in the production process: leisure can improve individuals’...

We develop a tractable growth model to study the dynamic macroeconomic effects of multinational production (MP) across countries. In this model, MP is the vehicle of international idea diffusion: when firms produce in a foreign country, they contribute to the local stock of knowledge. We...