Inflation risk, wealth expropriation and governance implications

The Expropriation of Environmental Governance

What do a Canadian ban on the exportation of hazardous wastes, California's remediation requirements for open-pit mines, and the Municipality of Lima's closure of a pasta factory have in common? They are all government measures that have been the subject of investor-state disputes resolved in international investment arbitration. The ability of foreign investors, as private actors in global pol...

The Expropriation of Environmental Governance

Expropriation risk and technology

This paper develops a unified framework to analyze the dynamics of firm investment in countries with poor legal enforcement. The firm’s technology edge over the government generates endogenous property rights. Industry variation in the technology gap predicts a sectoral pecking-order of expropriations. Long-run investment distortions may be Pareto superior relative to persistent investment at t...

Aggregate Implications of Wealth Redistribution: the Case of Inflation

This paper shows that a zero-sum redistribution of wealth within a country can have persistent aggregate effects. Motivated by the case of an unanticipated inflation episode, we consider redistribution shocks that shift resources from old to young households. Aggregate effects arise because there are asymmetries in the reaction of winners and losers to changes in wealth. We focus on two sources...

Autocratic Legislatures and Expropriation Risk

An important question for international investors concerns the relationship between political institutions and property rights. Yet a debate remains over whether authoritarian institutions promote favorable investment climates. Using data on oil nationalization in a sample of autocracies, this study finds that legislatures are correlated with lower expropriation risk in non-personalist dictator...