Government ownership of banks is very common in countries other than the United States. This paper provides cross-country, bank-level empirical evidence about political influences on these banks. It shows that government-owned banks increase their lending in election years relative to private banks. This effect is robust to controlling for country-specific macroeconomic and institutional factor...

This paper presents an industry equilibrium model where firms can choose to engage in corporate social responsibility (CSR) activities. We model CSR activities as an investment in customer loyalty and show that CSR decreases systematic risk. This e§ect is stronger for firms producing di§erentiated goods and when consumers’ expenditure share on CSR goods is small. We find supporting evidence for...

This paper argues that the private-public ownership factor should be differentiated from other factors that also influence the effect of privatization on efficiency. This is empirically confirmed in a longitudinal study of 24 Spanish firms, for which several political and organizational factors are found to influence the estimated effects of privatization on efficiency. The analysis of the timi...

Why do so many African governments consistently impose high tax rates and make little investment in productive public goods when alternative policies could yield greater tax revenues and higher national income? We posit and test an intertemporal political economy model in which the government sets tax and R&D levels while investors respond with production. Equilibrium policy and growth rates de...

A benchmark result in the political economy of taxation is that majority voting over a linear income tax schedule will result in an inefficiently high tax rate whenever the median voter has a below average income. The present paper examines the role of tax avoidance for this welfare assessment. We find that the inefficiency in the voting equilibrium is the lower, the higher the average level of...

The median voter theorem suggests that a majority vote over a linear tax-cum-transfer scheme results in egalitarianism if the median of the income distribution is poorer than the average. However, although most real-world income distributions are markedly skewed to the right, radical redistribution is rather an exception than the norm. In this paper we review the theoretical arguments that expl...

This paper investigates how financial, trade, institutional and political liberalization policies have affected financial efficiency in Africa. It uses updated data to appraise second generation reforms in order to gather fresh evidence and derive more updated policy implications. The ‘freedom to trade’ and ‘economic freedom’ indices are also employed. The following findings are established. (1...

External finance is critical for less established entrepreneurs, so poor investor protection can hinder competition. We model how lobbying for weaker investor protection reduces access to finance and decreases competition in countries where politicians are less accountable to voters. Weaker accountability thus produces a smaller economic elite. As empirical support for this result, in a broad p...

To Draft or Not to Draft? Efficiency, Generational Incidence, and Political Economy of Military Conscription We study the efficiency and distributional consequences of establishing and abolishing the draft in a dynamic model with overlapping generations, taking into account endogenous human capital formation as well as government budget constraints. The introduction of the draft initially benef...

This article examines exchange rate-based stabilization in an economy that has been badly destroyed by war or other calamities. The article does this in the context of post-civil war Lebanon. Both Iraq and Afghanistan are prime candidates for such a policy. This article first demonstrates the validity of the theory and empirical regularities (initial boom followed by an economic contraction) in...