The purpose of this research program is to conduct research in the area of macroeconomics with particular emphasis on the role of fiscal and monetary policy, the functioning of financial markets and the promotion of economic growth. We plan to address, with the aid of dynamic macroeconomic models, key questions in macroeconomics and public finance such as how to design capital and labour income taxation over time and how to efficiently provide public goods, such as education and public infrastructure, or social insurance. We also plan to study the design and implementability of economic reforms aimed at improving long-run economic performance. We emphasize the role of political incentives in the policy-making process: although certain types of changes in economic policy are generally viewed as desirable, they may be difficult or even impossible to implement in democracies because of "political constraints". One of the main tenets of our analysis is that such constraints must be explicitly recognized and formally investigated in the context of macroeconomic analysis. The project is structured into three subprojects. The first focuses on fiscal policy and its political determination. The second focuses on behavioural aspects and informational asymmetry, with applications to the analysis of financial markets and monetary policy. The third focuses on innovation and growth.