No abstract

International audienc

A reputation of competence in solving a particular problem is useful only if the problem remains in the future. Hence, there is an incentive to keep the "enemy" alive: an agent may do wrong in his or her job precisely because he or she is competent. The paper develops this mechanism in a general career concerns framework and shows that a tradeoff between reputation and the need for enemies emerges. As a result, agents are induced to produce only moderate effort, and only moderately skilled agents are likely to be appointed. Implications of the analysis are discussed in a multitasking environment with incomplete transparency. Some evidence in principal-agent relationships and the political arena is presented to illustrate our theory.

Wars of attrition are often characterized by negotiations and concessions occurring in conflicts, such as peace attempts or ceasefires. The present paper introduces a round of concessions into standard war of attrition models and focuses on a debt stabilization game. Concessions granted by each player in the pre-stabilization period are modeled as an agreement to pay additional taxes with the aim of reducing government deficits and public debt. We compute the symmetric Bayesian-Nash equilibrium and show that concessions prolong the attrition warfare rather than quickly generating a peace period. Thus, concession forms a strategic variable for every player to control and delay the end of the war. Furthermore, we establish that the war-ending outcome, namely debt stabilization, is more delayed under a coalition government than under a single-party government. Finally, this paper contributes to explain failures of austerity measures in public debt stabilization.

Few studies have focused specifically on the physiocratic analysis of money. The physiocrats' position was based on their criticism of Law's system and more broadly on the role of finance. First, they rejected the idea that a large amount of money was the condition for the wealth of nations. Second, they rejected paper money, as well as any form of currency alteration. As a simple means of exchange, Quesnay and his followers recognized that money could be replaced by paper. However, in order to comply with the “value for equal value” principle of exchange, money had to be made of precious metals, as Le Trosne, the main architect of the physiocratic monetary doctrine, forcefully asserted. This doctrine of money created a tension: from the circulation perspective, money was not considered as a component of wealth and could be replaced by paper to simply represent flows in expenditure; but from the equality-of-exchange perspective, money had to be made of precious metals, thus becoming a storable asset in a portfolio. To overcome this tension, the économistes were to forcefully denounce hoarding and deny money the function of a store of value.

This study analyzes the strategic use of public debt. Contrary to the classical view that politicians can use public debt to tie the hands of their successors, we show that an incumbent government can take advantage of having tied its own hands before the election with the help of public debt. By doing this, it reduces the basis for future social conflicts and benefits from social peace during its term, which may enhance its chances of being re-elected. In addition, in the case of foreign or external public debt, the incumbent can strategically divert future social conflicts toward a common enemy (foreign creditors). Thus, by increasing public debt before the election, the incumbent can strengthen social cohesion during his/her mandate, both by reducing the basis of internal conflicts and by diverting citizens from internal toward external rent-seeking activities.

No abstract

Contrairement au concept de solvabilité, dont les fondements théoriques sont clairs, la notion de soutenabilité fait appel à des considérations sur l’acceptabilité politique et sociale de la dette publique, considérations la plupart du temps laissées en dehors de l’analyse. Cet article met en évidence les limites de la notion de soutenabilité, en pointant les incitations des dirigeants politiques et en questionnant la représentation de la dette publique comme un fardeau. Classification JEL : H50, H54, H60, H62, H63, H68.