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We study the tension between fiscal decentralization and progressive taxation. We present a multi-community model in which households differ in incomes and housing preferences and in which the local income tax rate is a function of an exogenous progressive tax schedule and an endogenous local tax shifter. The progressivity of the tax schedule induces a self-sorting process that results in substantial though imperfect income sorting. The actual tax structure is thus less progressive than the exogenous tax schedule. Empirical evidence from the largest Swiss metropolitan area supports the predictions of our model.

The Arab Spring has led to very different outcomes across the Arab world. I present a highly stylized model of the Arab Spring to better understand these differences. In this model, dictators from the ethnic or religious majority group concede power if their country is oil-poor, but can stay in power by bribing the people if their country is oil-rich. Dictators from the minority group often rely on other members of their group to repress protests and to fight the majority group if necessary. These predictions are consistent with observed outcomes in Egypt, Libya, Saudi Arabia, Syria, Tunisia, and elsewhere.

We present a model in which a conservative incumbent with preferences for low public spending can strategically run a budget deficit to prevent the left-wing opposition candidate from choosing high public spending if elected, and possibly also to ensure his own reelection. We find that the incumbent never manipulates the opposition candidate's public spending if he can ensure his own reelection; and that a conservative incumbent who runs a budget deficit to ensure his reelection may somewhat paradoxically choose high public spending before the election. Adapted from the source document.

Over time the international development community has advocated various development paradigms, but countries following these paradigms have often performed poorly. I provide an explanation for this poor performance. In my model the political leader of a developing country chooses a policy and whether to implement it in an honest or corrupt manner. These choices affect domestic production and aid inflows. Production is high when productive capacity is high, and when the policy is appropriate in the country-specific circumstances and implemented honestly. Aid inflows are high when the policy is close to the paradigm. In equilibrium countries with low productive capacity and high corruption resulting from weak political institutions follow the paradigm more closely. Hence my model suggests that development paradigms have a tendency to fail because they are primarily followed by countries that would fail anyway.

Conventional wisdom suggests that compulsory voting lowers the influence of specialinterest groups and leads to policies that are better for less privileged citizens, who often abstain when voting is voluntary. To scrutinize this conventional wisdom, I study public goods provision and rents to special-interest groups in a probabilistic voting model with campaign contributions in which citizens can decide how much political information to acquire, and whether to vote or abstain. I find that compulsory voting, modeled as an increase in abstention costs, raises the share of poorly informed and impressionable voters, thereby making special-interest groups more influential and increasing their rents. Total government spending and taxes increase as well, while the effect on public goods provision is ambiguous. Compulsory voting may thus lead to policy changes that harm even less privileged citizens.

This paper analyses how income redistribution affects inequality in a society in which individuals differ in their earning abilities and their preferences for consumption and leisure. After discussing the shortcomings of various standard approaches, I measure inequality in such a heterogeneous society by the inequality in individuals' so‐called equivalent wages. This approach suggests that redistribution tends to reduce inequality by transferring income from high‐ability to low‐ability individuals, but to increase inequality by transferring income from consumption‐loving to leisure‐loving individuals. These countervailing effects lead in all my simulations to a U‐shaped relationship between redistribution and inequality.