Towards a Theory of Policy Making
AbstractThe paper presents a theory of policy timing that relies on uncertainty and transaction costs to explain the optimal timing and length of policy reforms. Delaying reforms resolves some uncertainty by gaining valuable information and saves transaction costs. Implementing reforms without waiting increases welfare by adjusting domestic policies to changed market parameters. Optimal policy timing is found by balancing the trade-off between delaying reforms and implementing reforms without waiting. Our theory offers an explanation of why countries differ with respect to the length of their policy reforms, and why applied studies often judge agricultural policies to be inefficient.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114639.
Date of creation: 2011
Date of revision:
Policy analysis; Uncertainty; Dynamic model; Transaction costs; Agricultural and Food Policy;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
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