Constitutional Capitalism for First-best Efficient Governance

This is a compendium of research based on a general equilibrium mathematical model of microeconomics of the game among net-worth maximizing stakeholders of leveraged firms, free capital markets pricing securities by arbitrage and a not-for-profit government. The model focuses purely on rational analysis. It is devoid of parochial dogmas, politics or prejudice. In equilibrium, the model attains first-best efficient policies which prove to be constitutional and stable. This model is more general than any other scripted in the extant literature for derivation of policies on governance of economies. The first-best efficient policies are antithetic to the second-best policies that stem from extant models driven by parochial dogmas, politics or prejudice. The more general equilibrium model shows that the extant second-best policies are unstable, inefficient and unconstitutional.

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