Globalization and the 'confidence game'

• 成果类型: Article
• 署名作者: Mukand, Sharun W.
• 署名单位: Tufts University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2006.03.001
• 发表日期: 2006
• 页码: 406-427
• 关键词: globalization; devaluation; International capital markets; Currency crisis; TRANSPARENCY

摘要

We show that governments in developing countries have an incentive to play the confidence game wherein the need to win the confidence of the international capital market 'can actually prevent a country from following otherwise sensible policies and force it to follow policies that it would normally consider perverse'. This incentive arises because of a combination of a 'conformity bias' and 'good news bias' in governmental decision making in an open economy, which results in inefficient outcomes which increases rather than decreases the threat of devaluation. While institutions that encourage greater transparency and the public revelation of information, may often mitigate this inefficiency, on some occasions increased transparency may even exacerbate the inefficiency. (c) 2006 Elsevier B.V. All rights reserved.