Reforms and confidence

• 成果类型: Article
• 署名作者: Haaparanta, Pertti; Pirttila, Jukka
• 署名单位: Aalto University
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2006.03.002
• 发表日期: 2007
• 页码: 534-550
• 关键词: policy reform; Behavioural economics; hyperbolic discounting; confidence; gradualism

摘要

We examine the choice of economic reforms when policymakers have present-biased preferences and can choose to discard information (maintain confidence) to mitigate distortions from excess discounting. The decisions of policymakers and firms are shown to be interdependent. Confident policymakers carry out welfare-improving reforms more often, which increases the probability that firms will invest in restructuring. While policymakers in different countries can be equally irrational, the consequences of bounded rationality are less severe in economies with beneficial initial conditions. We also examine how present-biased preferences influence the choice between big bang versus gradualist reform strategies. Our findings help explain differences in economic reform success in various countries. (C) 2006 Elsevier B.V. All rights reserved.