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Modern economics has largely ignored the issue of outright conflict as an alternative way of allocating goods, assuming instead the existence of well-defined property rights enforced by an undefined third party. And yet even in ostensibly peaceful market transactions, conflict exists as an outside option, sometimes constraining the outcomes reached through voluntary agreement. In this volume, economists offer a crucial rational-choice perspective on conflict, using methodological approaches that range from the game theoretic to the experimental. Several chapters use the recently developed contest success function to model conflict, examining such topics as alliance formation, regional conflicts under fiscal federalism, coups d’etat in developing countries, and the correlation between conflict and economic growth in Bolivia. Other chapters consider subjects that include the link between occupational choices and antigovernment activity in Afghanistan, social unrest and the IMF’s Structural Adjustment Program, and the effect of Tajikistan’s civil war on ex-combatants’ capacity for trust and cooperation. Taken together, these contributions show that economics needs a theory of conflict to understand both outright conflict and transactions in the shadow of conflict. But beyond this, they show that the study of conflict also needs the rigorous, methodology-based perspectives of economics.

Many things inform a country’s choice of tax system, including political considerations, public opinion, bureaucratic complexities, and ideas drawn from theoretical analysis. This book examines the role of optimal tax analysis in informing and influencing tax policy design. Scholars of public economics formulate models of optimal tax-transfer systems based on normative principles which reflect efficiency and equity considerations, and use that analysis to form views about the optimal design or reform of actual tax systems which are much more complicated than their models. The author argues that there is an important symbiosis between ideas drawn from normative tax analysis and tax policies actually enacted. Ideas germinated by normative analyses have led to the widespread adoption of the value-added tax, the use of refundable tax credits, and various business tax reforms. Other ideas provide rationales for existing features of tax systems, including the tax treatment of retirement savings and human capital investment. The author charts the evolution of optimal tax analysis, discusses the lessons it holds for tax policy, describes the theoretical challenges posed by recent findings in such fields as behavioral economics and social choice, and considers how optimal tax analysis might adapt to these new paradigms. His analysis offers an assessment of the role that optimal tax theory has played in establishing the principles which continue to inform tax policy.

The financial crisis of 2008 raised crucial questions regarding the effectiveness of the way the United States regulates financial markets. What caused the crisis? What regulatory changes are most needed and desirable? What regulatory structure will best implement the desired changes? This book addresses those questions with contributions from an ideologically diverse group of scholars, policy makers, and practitioners. It grew out of a conference hosted by the Mossavar-Rahmani Center for Business and Government at Harvard’s Kennedy School of Government in October 2009, and reflects the dynamic give-and-take nature of the event.