The paper investigates the effects of ethnic diversity on economic performance and the risk of violent conflict. Diversity has various detrimental microeconomic effects, tending to reduce public sector performance, increase patronage, and lower the level of trust among individuals. However, whether diversity adversely affects overall economic growth depends upon the political environment. Diver...

Medicare spends more than $200 billion a year; the politics surrounding the Medicare program cannot be fully understood without an adequate appreciation of that fact. An understanding of the political economy of Medicare is perhaps best achieved by thinking along three dimensions: (1) Medicare as redistributive politics; (2) Medicare as special-interest politics; and (3) Medicare as distributiv...

Research showing an association between business cycles and imprisonment is suspect on both theoretical and empirical grounds. Most research on this topic uses an impoverished notion of business cycles andpays no attention to differences in the institutional contexts o f economic polic.vmaking. This article reexamines this issue using data from 15 afluent capitalist democracies observed over 30...

How do we set the accounting standards? The topic has received much attention during the past 50 years. Perhaps the first step toward a satisfactory resolution of the problem is to recognize that the problem of standardization is not unique to accounting. There are approximately five hundred standard-setting organizations in the United States alone and many more in other countries, setting stan...

H10, B25, A11 KEy woRdS: JEL Classification: political economy, public choice, constitutional economics, institutions, 1 University of Warwick, UK; CREMA – Center for Research in Economics, Management and the Arts, Switzerland 2 University of Zurich, Switzerland Corespondence concerning to this article should be addressed to: [email protected] Bruno S. Frey1 and Lasse Steiner2

The regulations that shape the design and the operations of corporations, credit and securities markets differ vastly from country to country. In addition, similar regulations are often unequally enforced in different countries. Economists still have an imperfect understanding of why these international differences exist and of whether they tend to persist over time. However, a recent strand of...

The Political Economy of Conscription Though in decline recently, military conscription is still a widely used mode of staffing armies. Since not many valid economic, social or military arguments in favor of the draft can be put forward, the question emerges why societies choose to rely on it. In this survey we explain the political allure of military conscription by its specific intraand inter...

In spite of the inexorable march of democracy around the globe, just how democratic institutions affect human well-being is open to debate. The evidence that democracy promotes prosperity is neither strong nor robust. Moreover, which aspects of policy making and human well-being are promoted by democracies is still a subject of debate. Even if correlations between democracy and outcome measures...

“Substantial downzoning” is defined as the exercise of police power to significantly reduce the legally permitted density on undeveloped land in a community. This contentious practice is typically challenged by those who perceive the action to limit their market opportunities (e.g., farmers and developers), their sympathizers, and others who prefer the status quo. Supporters tend to be those wh...

We study the constrained Pareto efficient allocations in a dynamic production economy in which the group that holds political power decides the allocation of resources. We show that Pareto efficient allocations take a quasi-Markovian structure and can be represented recursively as a function of the identity of the group in power and updated Pareto weights. For high discount factors, the economy...