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Coalition Preclusion Contracts and Moderate Policies
(2016)CEPR Discussion PapersWe examine the effects of a novel political institution called Coalition Preclusion Contracts (CPCs) on the functioning of democracies with proportional representation. CPCs enable political parties to credibly exclude one or several parties from the range of coalitions they are prepared to envisage after elections. We consider a simple political game with a two-dimensional policy space in which three parties compete to form the government. ...Working Paper -
Tax contracts and government formation
(2008)CEPR Discussion PapersWe examine how tax contracts affect government formation and welfare of voters in a parliamentary democracy. A tax contract specifies a range of tax rates a party is committed to if in government. We develop a new model of party competition and show that the introduction of tax contracts has two effects: a perks-reduction effect and a policy-shift effect. The former is dominant in soci- eties with a low degree of political polarization. ...Working Paper -
How Much Science? The 5 Ws (and 1 H) of Investing in Basic Research
(2015)CEPR Discussion PapersThe aim of this paper is to identify possibilities for guiding policy in the area of basic research. We provide an extended review of basic research and offer new insights on its linkages to key economic variables and economic growth. After defining what basic research is, we identify and discuss a series of emerging policy issues by asking why we should invest in basic research, who should invest how much in basic research and when, over ...Working Paper -
Raising Juveniles
(2010)Discussion paper seriesThis paper investigates how families make decisions about the education of juveniles. The decision problem is analyzed in three variations: a 'decentralized' scheme, in which the parents control the purse-strings, but the children dispose of their time as they see fit; a 'hierarchical' scheme, in which the parents can enforce a particular level of schooling by employing a monitoring technology; and the cooperative solution, in which the ...Working Paper -
Optimal Mix of Applied and Basic Research, Distance to Frontier, and Openness
(2010)Discussion paperWe study the interplay between basic and applied research intensities in a simple model of creative destruction with research complementarities. Basic research intensity is chosen by the government and applied research intensity by the private sector. We find that the closer the country is to the world’s technological frontier the more the government should invest in basic research and the more the private sector will react with higher ...Working Paper