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...

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...

This paper formulates a general theory of how political unrest influences public policy. Political unrest is motivated by emotions. Individuals engage in protests if they are aggrieved and feel that they have been treated unfairly. This reaction is predictable because individuals have a...

The legitimacy of the world trading system is under growing attack, as challenges to its conformity with norms of fairness and social justice are increasingly voiced by citizens and their governments around the world. Taking a novel "bottom up" approach to concerns for fairness, we show how...