This paper studies the effects of asymmetries in re-election probabilities across parties on public policy and its subsequent propagation to the economy. The struggle between opposing groups–that disagree on the composition of public consumption–results in governments being endogenously short-sighted: Systematic under investment in infrastructure and overspending on public goods arise, as resou...

In this paper, I analyze consumption, aggregate savings,output and welfare implications of …ve di¤erent social security arragements whenever there is demographic uncertanity. Following Bohn(2002), I analyze the e¤ect of an uncetain population growth in an extended version of a modi…ed Life-cycle model developed by Gertler(1999). Population growth dampens savings and output under all arrangement...

We propose a dynamic general equilibrium model that yields testable implications about the fiscal policy run by governments of different political color. Successive generations of voters choose taxation, expenditure, and government debt through repeated elections. Voters are heterogeneous by age and by the intensity of their preferences for public good provision. The political equilibrium switc...

A player's influence relative to a mechanism and opponents' strategies is the maximum difference his action can make in the expected value of a collective outcome. A player is :-pivotal if his influence exceeds a threshold :. We provide tight bounds on the number of pivotal players and on average influence. These bounds are uniform over all mechanisms and action profiles and are achieved at mec...

This paper analyzes the private provision of public goods where consumers interact within a fixed network structure and may benefit only from their direct neighbors’ provisions. We present a proof for existence and uniqueness of a Nash equilibrium with general best-reply functions. Our uniqueness result simultaneously extends similar results in Bergstrom, Blume, and Varian (1986) on the private...

The Political Economy of Social Exclusion with Implications for Immigration Policy Minorities, such as ethnic and immigration groups, have often been subject to exclusion through labor market discrimination, residential and employment segregation policies, business ownership regulations, restrictions on political participation, access to public services and more. This paper studies the dynamics...

We provide a solution to the free-rider problem in the provision of a public good. To this end we defi ne a biased indirect contribution game which provides the effi cient amount of the public good in non-cooperative Nash equilibrium. No confi scatory taxes or other means of coercion are used. We rather extend the model of Morgan (2000), who used fair raffl es as voluntary contribution schemes,...

By distinguishing between producible and nonproducible public goods, we are able to propose a general equilibrium model with externalities that distinguishes between and encompasses both the Starrett [1972] and Boyd and Conley [1997] type external effects. We show that while nonconvexities remain fundamental whenever the Starrett type external effects are present, these are not caused by the ty...

Social preferences such as altruism, reciprocity, intrinsic motivation and a desire to uphold ethical norms are essential to good government, often facilitating socially desirable allocations that would be unattainable by incentives that appeal solely to self-interest. But experimental and other evidence indicates that conventional economic incentives and social preferences may be either comple...

This paper uses a Bayesian mechanism design approach to investigate the effects of communication in a threshold public goods game. Individuals have private information about contribution costs. If at least some fraction of the group make a discrete contribution, a public benefit accrues to all members of the group. We experimentally implement three different communication structures prior to th...