The Stakes and Informativeness Trade-Off: Electoral Incentives to Implement Programmatic Transfers. [Link]
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If a transfers policy is programmatic (it is transparent and non-manipulable), is it irrelevant for politicians' electoral fortunes? I show that the answer is no with a political agency model where politicians' competence is uncertain to all. In my setup, an incumbent can allocate a budget to public goods and transfers. These policies differ in one key dimension: the provision of public goods fluctuates more over time relative to transfers. When the incumbent increases the budget to public goods, two effects arise: his performance in office today reveals more information about his identity (an informativeness effect), and voters' anticipation of narrow transfers tomorrow increases the salience of political selection (a stakes effect). To the incumbent, these two effects move in opposing directions and, consequently, the strategic allocation of the budget helps him to advance his electoral fortunes.

Brains or Muscles? A Political Economy of Tax Evasion (with Alberto Parmigiani). [Link]

A wealthy citizen wants to get away with offshore tax evasion. To reduce the chances of being financially audited, he can sophisticate his evasion scheme through a "brains" type of investment. In our framework, an audit does not directly lead to sanctions: evidence needs to be uncovered by a tax investigator, in the shadow of retaliation by the wealthy through a "muscles" investment. We show that there exists a threshold in the quality of institutions below which brains and muscles are positively correlated, and above which the correlation becomes negative. The empirical implication of our theoretical model suggests that estimates of offshore tax evasion have an inverse U-shaped relationship with institutional strength. We build a panel dataset of offshore wealth by individuals for thirty-seven countries between 2002 and 2006, and we show robust evidence in support of the theoretical prediction by utilizing an array of parametric and nonparametric-based methods.

Merchants of Reputation: Privatization under Elites’ Manipulation of Information. [Link]

An economic elite wants to buy a public asset as cheaply as possible. Its ownership is decided by an incumbent politician who can be of high or low competence. The elite can make a buying offer for the asset and manipulate the information that is available to voters about the incumbent’s competence. By attacking the incumbent (trying to uncover bad news about his competence before making him an offer) or threatening him (with uncovering bad news if he refuses to sell), I show that the elite can reduce the prices that the incumbent would accept for selling the asset. I also show that the elite often (but not always) uses threats against a leading incumbent (one who has better reputation than his challenger) and attacks against a trailing one. I further find that a better reputation can actually render an incumbent more susceptible to the elite’s influence.