We consider a two-period overlapping generations model in which individual voters differ not only according to age but also productivity. In such a setting, a (redistributive) Pay-As-You-Go system is politically sustainable, even when the interest rate is larger than the rate of population growth. The medium wages workers (not the lowest) join the retirees to form a majority and vote for a posi...

The transition to sustainability will be difficult. Environmental sustainability entails living within the Earth’s limits, yet the majority of scientific studies indicate a condition of overshoot. For mainstream economists sustainability means perpetuating economic growth. Consequently, environmental and economic sustainability are incompatible in the present institutional context. This paper s...

This paper examines the political economy of structural social security reformthe shift from a publicly managed, pay-as-you-go, defined benefit system to one that includes a defined contribution, funded, privately managed pillar. We analyze the connection between the preexisting conditions in a country and the reforms that are likely to succeed and describe some of the strategies that policy-m...

In the comparative political economy of rich democracies there is a long tradition of classifying countries into one of a small number of categories based on their economic institutions and policies. The most recent of these is the Varieties of Capitalism project, which posits two major clusters of nations: coordinated and liberal market economies. This classification has generated controversy....

We provide a general framework for the analysis of the dynamics of institutional change (e.g., democratization, extension of political rights, or repression of different groups), and how these dynamics interact with (anticipated and unanticipated) changes in the distribution of political power and in economic structure. We focus on Markov Voting Equilibria, which require that economic and polit...

European Monetary Union (EMU) is here at last, but according to economists’ traditional perspective on economic policy making, it should not be. Given the nontrivial nature of this occurrence, it offers an important warning signal that policy economists need to reexamine our assumptions about the forces generating economic policy decisions. Economists, of course, have strong preferences for ana...

Political economy studies of health policy offer more than simple economic or political studies. Politics can have a greater influence on health policy decisions and their implementation than either economic or health considerations. Politics constrain how much of an optimal economic or health programme can be adopted and implemented. At the same time, the economic interests of the stakeholders...

The literatures dealing with voting, optimal income taxation, and implementation are integrated here to address the problem of voting over income taxes. In contrast with previous articles, general nonlinear income taxes that affect the labor-leisure decisions of consumers who work and vote are allowed. Uncertainty plays an important role in that the government does not know the true realization...