We study how the shadow economy affects pollution and how this effect depends on corruption levels in public administration. Production in the shadow economy allows firms to avoid environmental regulation policies; a large informal sector may be accompanied by higher pollution levels. Our...

Many decisions in politics and business are made by teams rather than by single individuals. In contrast, economic models typically assume an individual rational decision maker. A rapidly growing body of (experimental) literature investigates team decisions in different settings. We study team...

We show that a minimum wage introduced in the presence of asymmetric information about worker productivities will lead to lower unemployment levels than predicted by the standard labour market model with heterogeneous labour and symmetric information

This paper analyzes informational aspects linked with foreign direct investment in economies that just open up to foreign investors and steer towards a market economy. From the viewpoint of foreign firms, such economies are still largely a terra incognita as far as economic and practical...

This paper analyzes informational aspects linked with foreign direct investment in economies that just open up to foreign investors and steer towards a market economy. From the viewpoint of foreign firms, such economies are still terra incognita as far as economic and practical conditions for...

This article develops a simple framework for analyzing the links between corruption and the unofficial economy and their implications for the official economy. In a model of self-selection with heterogeneous entrepreneurs, we show that the entrepreneurs' option to flee to the underground economy...

The literature on central banking so far has provided explanations of why we observe independent central banks and why central banks are usually more conservative than governments. However, little is known about the interaction between the two institutions. Bridging the gap, we focus on the...

The idea of deregulating shopping hours brings strong opposition from many groups in the society. Surprisingly, even many consumers oppose deregulation. The paper rationalizes this behavior by considering heterogeneous consumers who differ in their earnings abilities. If a majority of families...

We develop a simple model of fiscal competition among ageing municipalities. When ageing advances, gerontocracies and social planners gradually substitute publicly provided goods aimed at the mobile young population for publicly provided goods for the elderly. This substitution process does not...

We examine evidence for a systematic underperformance of Germany's state-owned banks in the current financial crisis and study if the bank losses can be traced to the quality of bank governance. For this purpose, we examine the biographical background of 593 supervisory board members in the 29...