Promises, Promises: Credible Policy Reform via Signalling
AbstractEmpirical experience and theory both suggest that policy reforms can be aborted or reversed if they lack sufficient credibility. One reason for credibility problems is the doubt regarding how serious the government really is about the reform. This paper considers a framework in which the private sector is unable to distinguish between a genuinely reformist government and a government that simply feigns interest in reform because it is a precondition for foreign assistance. The general conclusion is that the magnitude of the reform may serve to convey the government's future intentions and, hence, act as a signal of its "type." Copyright 1989 by Royal Economic Society.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 99 (1989)
Issue (Month): 397 (September)
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Other versions of this item:
- Dani Rodrik, 1988. "Promises, Promises: Credible Policy Reform via Signaling," NBER Working Papers 2600, National Bureau of Economic Research, Inc.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-37, December.
- Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 102(3), pages 651-78, August.
- Persson, Torsten & van Wijnbergen, Sweder, 1993.
"Signalling, Wage Controls and Monetary Disinflation Policy,"
Royal Economic Society, vol. 103(416), pages 79-97, January.
- Torsten Persson & Sweder van Wijnbergen, 1989. "Signalling, Wage Controls and Monetary Disinflation Policy," NBER Working Papers 2939, National Bureau of Economic Research, Inc.
- Rodrik, Dani, 1987. "Trade and capital-account liberalization in a keynesian economy," Journal of International Economics, Elsevier, vol. 23(1-2), pages 113-129, August.
- Barro, Robert J & Gordon, David B, 1983.
"A Positive Theory of Monetary Policy in a Natural Rate Model,"
Journal of Political Economy,
University of Chicago Press, vol. 91(4), pages 589-610, August.
- Robert J. Barro & David B. Gordon, 1983. "A Positive Theory of Monetary Policy in a Natural-Rate Model," NBER Working Papers 0807, National Bureau of Economic Research, Inc.
- Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
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