Non-cooperative and Cooperative Policy Reforms under Uncertainty and Spillovers
Loading...
Date
Authors
Publisher
Philipps-Universität Marburg
Abstract
When countries need to implement costly economic policy reforms,
these often imply uncertainties about their effectiveness for the home
country and their spillovers to other countries. We develop a model to
show that under these circumstances countries implement too few or
too many policy reforms. From a social perspective, too many reforms
follow if the spillover effects of reforms become sufficiently uncertain.
Since centralization of policies to correct ineffcient policies is often
not possible, we look for alternative instruments that can restore the
effcient level of reforms. We compare subsidizing reform efforts with
insuring against bad outcomes, and argue that subsidies are advanta-
geous in terms of requiring less information for implementation.
Metadata
License
This item has been published with the following license: In Copyright