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Working Paper
The political economy of endogenous taxation and redistribution
This paper examines a simple dynamic model in which agents vote over capital income taxation and redistributive transfers. We show that in equilibrium the typical agent's preferences over the tax rate are single-peaked and derive a closed-form solution for the majority-rule tax rate. We also show that high levels of initial wealth inequality can place the economy on the 'wrong side of the Laffer curve'.
Working Paper
The Changing Polarization of Party Ideologies: The Role of Sorting
Ideology scores derived from U.S. congressional roll-call voting patterns show that the ideological distance between the two parties along the primary dimension changes inversely with the ideological distance along the secondary dimension. To explain this inverse association, a model of party competition with endogenous party membership and a two-dimensional ideology space is developed. If the distribution of voter preferences is uniform on a disk, equilibrium ideological distances along the two dimensions are inversely related. The model can quantitatively account for the historical ...
Working Paper
The Changing Polarization of Party Ideologies: The Role of Sorting
Ideology scores derived from U.S. congressional roll-call voting patterns show that the ideological distance between the two parties along the primary dimension changes inversely with the ideological distance along the secondary dimension. To explain this inverse association, a model of party competition with endogenous party membership and a two-dimensional ideology space is developed. If the distribution of voter preferences is uniform on a disk, equilibrium ideological distances along the two dimensions are inversely related. The model can quantitatively account for the historical ...
Working Paper
What drives economic policy uncertainty in the long and short runs? European and U.S. evidence over several decades
Economic policy uncertainty (EPU) has increased markedly in recent years in the U.S. and Europe, and some have posited a link between this phenomenon and subpar economic growth in advanced economies (see Baker, Bloom, and Davis, 2015). But methodological and data concerns have thus far raised doubts about whether EPU contains marginal and exogenous information about other economic phenomena. Our work analyzes the impact on EPU of several possibly endogenous variables, such as inflation and unemployment rates in countries where EPU is measured. We also consider longer-term technological ...