This paper presents a new solution to the time-consistency problem that appears capable of enforcing ex ante policy in a variety of settings in which other enforcement mechanisms do not work. The solution involves formulating a social contract, institution, or agreement that specifies the optimal ex ante policy. The social contract is effectively sold by succesive old generations to successive young generations, who pay for the social contract through the payment of taxes. Both old and young generations have an economic incentive to fulfill the social contract. For the old generation, breaking the social contract makes the social contract valueless, and the generation suffers a capital loss by not being able to sell it. For the young generation the economic advantage of purchasing the existing social contract exceeds its price as well as the economic gain from setting up the a new social contract.

We propose a model with micropolitical foundations to compare the public …nance outcomes under a presidential-congressional and a parliamentary system. Compared to a parliamentary system, a presidentialcongressional system has less incentives for legislative cohesion, but has a clearer separation of powers. These features make public …nance outcomes radically di¤erent in the two systems. A Parliamentary system has redistribution towards a majority, less underprovision of public goods, more rents to politicians and a higher tax burden, whereas a presidential-congressional system has redistribution towards powerful minorities, more underprovision of public goods, but less rents to politicians and a smaller size of government. JEL classi…cation: H00, D72, D78.

This paper demonstrates how time consistency of the Ramsey policy -the optimal fiscal and monetary policy under commitment -can be achieved. Each government should leave its successor with a unique maturity structure for the nominal and indexed debt, such that the marginal benefit of a surprise inflation exactly balances the marginal cost. Unlike in earlier papers on the topic, the result holds for quite a general Ramsey policy, including timevarying polices with positive inflation and positive nominal interest rates.

This paper demonstrates how time consistency of the Ramsey policy–the optimal fiscal and monetary policy under commitment–can be achieved. Each government should leave its successor with a unique maturity structure for the nominal and indexed debt, such that the marginal benefit of a surprise inflation exactly balances the marginal cost. Unlike in earlier papers on the topic, the result holds for quite general Ramsey policies, including timevarying polices with positive inflation and positive nominal interest rates. We compare our results with

Abstract We study the politicians and voters of the Sweden Democrats, a major populist radical-right party. Based on detailed administrative data, we present the first comprehensive account of which politicians are selected into such a party. Surveys show that politicians and voters of the Sweden Democrats share strong anti-establishment and anti-immigration attitudes that drastically set them apart from Sweden’s other parties. Searching for individual traits that link naturally to these attitudes, we classify the universe of Swedish politicians and voters by social and economic marginalization and exposure to immigration. Politicians from the Sweden Democrats over-represent marginalized groups without strong attachments to the labour market or to traditional nuclear families, which instead are under-represented among politicians in all other parties. Among voters, the Sweden Democrats have higher electoral support in precincts with higher shares of the same marginalized groups. We see the mobilization of the marginalized as an important driver of the party’s success. Finally, we uncover that Sweden-Democrat politicians score lower on a number of valence traits than other-party politicians. In sum, the rise of the Sweden Democrats raised political representation for marginalized groups, but this came at a valence cost.

We develop a model where party leaders choose the competence of politicians on the ballot to trade off electoral success against their own survival. The predicted correlation between the competence of party leaders and followers is strongly supported in Swedish data. We use a novel approach, based on register data for the earnings of the whole population, to measure the competence of all politicians in 7 parties, 290 municipalities, and 10 elections (for the period 1982–2014). We ask how competence was affected by a zipper quota, requiring local parties to alternate men and women on the ballot, implemented by the Social Democratic Party in 1993. Far from being at odds with meritocracy, this quota raised the competence of male politicians where it raised female representation the most. We argue that resignation of mediocre male leaders was a key driver of this effect. (JEL D72, J16)

Can a democracy attract competent leaders, while attaining broad representation? Economic models suggest that free-riding incentives and lower opportunity costs give the less competent a comparative advantage at entering political life. Moreover, if elites have more human capital, selecting on competence may lead to uneven representation. This article examines patterns of political selection among the universe of municipal politicians and national legislators in Sweden, using extraordinarily rich data on competence traits and social background for the entire population. We document four new facts that together characterize an “inclusive meritocracy.” First, politicians are on average significantly smarter and better leaders than the population they represent. Second, this positive selection is present even when conditioning on family (and hence social) background, suggesting that individual competence is key for selection. Third, the representation of social background, whether measured by parental earnings or occupational social class, is remarkably even. Fourth, there is at best a weak trade-off in selection between competence and social representation, mainly due to strong positive selection of politicians of low (parental) socioeconomic status. A broad implication of these facts is that it is possible for democracy to generate competent and socially representative leadership.