 So, thank you very much, it's a pleasure to be in this session with these distinguished colleagues and friends and to have this wonderful audience. For the sake of time, maybe I'll skip a bit of the introduction, we're going to talk a bit about last year, since not everyone is totally familiar, but let me skip, say that we're part of a broader project led by some colleagues, very distinguished colleagues who are here, within that broader project, the papers you are seeing today is going to be a set of papers of this initial launch of the initiative in this particular case on political economy and the paper that Carlos Escartacini and I are writing with the help of two extremely bright young master students relates a bit to the previous topic in the volumes, if you wish, which is the issues of taxation and distribution and we're doing a bit of the political economy of that. There is a, I was going to kind of point to Daron while doing this. There is this going, oh, I'm going to point to Daron while doing this. There is this dominant view of the political economy of Latin America, which is rightly dominant, which could be summarized by the way of some of the previous work of Daron and Jim, that argues that part of the, and the paper Barleo Poldo and Cossos, of course, goes in that part, in that direction, that part of the explanation of the high and persistent inequality in Latin America has to pass with concentration of power. This general view, which is largely right, has a fiscal version that would say is because of the power of the rich that in the region we have low taxation and low redistribution. So in this paper, we argue that this is a good characterization for many countries in many points in time, but not a good characterization for all countries at all points in time. And to see this very quickly, we have a couple of figures showing the size of the state in different places in the world and different places in Latin America. We see that some Latin American countries like Brazil or Argentina have states the size of the high-income OECD countries. We also see a high variation in social spending in Latin America. Social spending is not identical to redistribution, but it's a close casting. So what we do is in this paper is provide a bit of a framework to look at the more general political economy approach that would allow to explain these different distributive outcomes, but also it does so in a way that looks at the broader set of symptoms. And in particular, we want to, again, Darun is one of the great contributors to that literature also, we want to draw on an issue that is extremely important for many Latin American countries, which is the issue of populism. And we want to bring together to inequality outcomes, other social outcomes of great importance and saliency in the region, such as low growth, low productivity, insufficient savings, low quality public policies. This set of additional outcomes, very briefly in the schematic pseudo-model I will present, I will call efficiency. So the general argument is that different countries are in different political economic equilibria as the title of the session and as the leaders of the project have correctly named this part of the effort. So what we do in the paper, and I'm going to go very briefly over some of that, is we characterize this is related to the previous part of the project. We characterize the fiscal vector of Latin American countries in a number of relevant dimensions. Then we briefly review, and we have enough to do that, given that this is like a state of the art volume, not just your last little contribution, to review with some of the explanations of these different syndromes, which I repeat are not enough redistribution, as Santiago was highlighting in the discussion yesterday, but also a poor quality, poor it is an efficient state. But in general, this literature, sometimes having the same authors, goes through different tracks, like some papers explain inequality, literal distribution, other papers explain efficiency, of course there are some exceptions, and what some exceptions, and what we are going to argue here is for a framework, one particular perhaps way of a more general framework, that try to explain both type of outcomes at the same time as characteristics of different countries being in different political economic equilibria. So first part fiscal vector, we try to characterize three things. How large is the state, how much they distribute, and how efficiently they do it. For that, I don't have time to explain the data now, maybe in the Q&A, we have characteristics of countries in terms of government size, in terms of government efficiency, and the height of the diagram, which is reflected here in a cutoff in two colors, the brown ones are low distribution countries, the blue ones are high distribution countries, according to the commitment to equity data of non-alustric and collaborators, and we see that there are countries all over the place. The OECD reach mostly European countries are mostly in this area, even though we don't have the distributive data and the data set, but the ones that happens to be there are all high distribution, so there are a set of countries in the world that have large states that they are fairly efficient and they distribute a substantial amount of resources towards the more vulnerable sectors. Latin America are these countries that we color here. They tend to be in the smaller size, smaller distribution, I'm sorry, smaller size, smaller efficiency, and some variation in terms of redistribution. So to summarize, we have different types of countries. In this paper with Carlos, we kind of contract the tax redistribution axis versus the efficiency axis. In some other work with Nora, we are working more in this distinction here, and there are these types, countries with small states, they don't do much, and the little that they do is not very good. Other countries in the other end, unfortunately, not in Latin America, where everything is blown, happy, and successful, and in cases like Chile, which have small states, but high efficiency, or like Argentina have large states, larger distribution, and very low efficiency. Perhaps one or two slides, a summary of the political economy of redistribution, the basic underlying model is a median voter model, Alamelza-Richards. This model is a model of tax on redistribution within Amheterogeneity. Given functional assumptions, we can apply a median voter result, and we have the well-known result that more unequal income distribution will call for more redistribution. And this has been used very extensively and very successful, an important leader on democratization, expecting, as Leopoldo was saying, that after more movement towards more democratic politics, we would expect more taxation, more redistribution. As everyone, or most people in the room know, the results are mixed, and there are various ways of extending the median voter model to try to understand why these things don't happen and why they don't happen so often. All implies extending the median voting model or raising one or another assumption. In a very simplistic way here, we summarize by sociological class some of the explanation focused on the poor and the ones about preferences and perceptions the neighborhood working on is part of that story. As it was mentioned in the two previous presentations, some relate to the middle class, and Noam has a very nice paper that connects to that. And then there is, which I rightly think is the dominant view, that is the one that focuses on the power of elites. Where there is this book by Jim Andaron that made this very cohesive argument of the process of democratization and these sort of bargainings between elites and the masses, if you wish. And the model, of course, in its basic formulation, the polity under democracy will work Alamelza Richards, that this will be a median voter model. But, and that's one of the nice contributions of that book, they consider the situation in which the elites somehow do things in the transition, like in Chile or in different cases, that make the post-democratic game not a median voter one, but a median voter with many other political resources in hands of the richer segments of the population. Okay, so that's the one minute summary of the elite domination, explanation, and other explanations of not enough redistribution in Latin America. Then in terms of the political economy of inefficiency, I'm not going to explain all of these papers in detail, but these are some of my favorite papers in the field, they could be organized in terms of which is the main underlying distortion that lead to inefficient policies, many pieces emphasize problems of timing consistency, imperfect information, non-cooperation, et cetera. I like very much this paper by Daron that uses the logic of the code theorem applied to politics and essentially is a commitment problem. I cannot commit to do things differently in the future, and that forces inefficient choices today. In some other literature, famous paper by Alberto 1988 and other follow-ups, they emphasize, we emphasize a bit, the possibility or not of cooperating over time, and when you get society to cooperate over time, you get better policies than what they do not. So the last four minutes I have a couple of sort of summary statements about a framework that perhaps could accommodate explaining the different equilibria and at the same time explain the level of redistribution and the level of efficiency. Imagine two groups, rich and poor, the rich have to make investments, investments relate to growth, and after that the political system that needs to be specified makes a decision on redistribution on the location of this output. As you know, in a one period model, there is only one equilibrium in which the group that is dominant exposed take as much as they can of the product for themselves, which leads in the initial period, in the first stage of this only period, the investing, the group that has the technology to invest, they may decide not to invest because that investment will be appropriated in the second stage. Of course, there are many other solutions to the repeated game, and to the repeated game, we add an institutional structure where the rich and the poor do not go directly because they cannot solve perfectly their own collective action problems, and they go through political representatives in a democratic realm, and these political representatives could be of different quality, could be of different types, or just in equilibrium, who have different actions, some of which relate to the level of redistribution in society, but some of that will also relate to the level of appropriation of resources from themselves, that is corruption, also related to the paper by Leopoldo and others, is sort of a tax in this context. So very quickly, we have different configurations of political systems, if you wish, some in which the their own effects of an elite that dominates and have a lot of de facto power beyond the jury will be cases where the rich are very powerful, there will be cases, let's say just three, although in the model this is continuous, which there is more of a balance of power of representation of different groups, and other cases in which in the political democratic gamers, not surprising that the representatives of the poor that are a majority tend to be the dominant political party, and then you can have different degrees of agency problem, this type of model can generate very, very different types of equilibria for brevity and for convenience for myself, I will focus on those that I like the most. Under some parameter configurations, you will have cooperation, and cooperation in this model implies that the rich invest optimally, and then there is a reasonable degree of redistribution of that high output, and then on a cooperative equilibria come in different formats, for instance, one will be the rich are very powerful, and at the same time, they really dominate the state, and there are no agents that steal from them, etc. So it's like they are the owners of the country, they will invest as much as this is convenient for them, but there will be little redistribution, and to go to their corner, you can have situations in which the government in power is a government that represents the interests of the poor and attempts to redistribute, but they do show in a way that is fairly inefficient, and for both reasons, in an ex-ante manner, the rich will not invest or invest very little depending on the details of a continuous or discrete model, and this type of political configuration and this type of outcome would be naturally associated with elite domination, the sort of standard historical case of Latin America with some variations here, and this will be the typical, let's say, left-wing populace also quite common in Latin America even these days, and we argue that this connects to some of the observations in terms of these three characteristics of the fiscal states, and in the final part of the paper, we go a bit broader than this little model and connect to other issues and other relevant dimensions for Latin America that one would naturally expect in a large interpretation of the model, that will be correlations that come in different types of equilibria, let me show you just two for brevity, this will be countries that have large taxation, large redistribution, and are very efficient in Norway's of this world, and in those cases we observe, it's hard to explain here, but we observe low corruption, we observe high institutionalization, and we observe lots of trust among people, and in other corners where you have a small state, a little distribution and very inefficient, in those cases you expect, you correlate, actually not you expect, you correlate with more corruption, less institutionalization, and less trust among citizens and among themselves and with politicians, and just want to find a line, this looking at trust, looking at, at no make-up of Lapov, etc. Many of the things there are, could be the natural micro foundations of the beliefs that sustain the different type of equilibria, so we're trying to connect the belief information to the outcomes in terms of fiscal results, and I'll stop here. Thank you very much.