This file is part of IDEAS , which uses RePEc data
[ Papers |
Articles |
Software |
Books |
Chapters |
Authors |
Institutions |
JEL Classification |
NEP reports |
Search |
New papers by email |
Author registration |
Rankings |
Volunteers |
FAQ |
Blog |
Help! ]
Primer on Reforms in a Second-Best Ambiguous Environment: A Case for Gradualism Author info | Abstract | Publisher info | Download info | Related research | Statistics S. Nuri Erbas
Ambiguity, as opposed to uncertainty, reflects lack of sufficient information about distribution and payoffs of infrequent events. Reforms are infrequent events, undertaken in ambiguous second-best environments where bad reform outcomes are feasible. A general case for the gradualist reform strategy is that it may pay to defer some reforms until relevant information about possible reform outcomes and associated probabilities is revealed, and ambiguity is reduced over time. Gradualism may dominate the big bang strategy, if some of the reforms in a reform sequence are not sure bets and waiting costs do not dominate reversal costs under some information sets forthcoming over time. The relation to Ellsberg's Paradox is discussed. Some cases for and against gradualism are reviewed.
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page . Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Paper provided by International Monetary Fund in its series IMF Working Papers with number
02/50.
Download reference. The following formats are available: HTML
(with abstract ),
plain text
(with abstract ),
BibTeX ,
RIS (EndNote, RefMan, ProCite),
ReDIF
Length: 56 pages
Date of creation: 29 Mar 2002Date of revision:
Handle: RePEc:imf:imfwpa:02/50Contact details of provider: Postal: International Monetary Fund, Washington, DC USA Phone: (202) 623-7000 Fax: (202) 623-4661 Email: Web page: http://www.imf.org/external/pubind.htm More information through EDIRC
Order Information: Web: http://www.imf.org/external/pubs/pubs/ord_info.htm
For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).
Keywords: Economic reform ; Environment ; Economic models ; Other versions of this item:
References listed on IDEAS 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.: Gilboa Itzhak & Schmeidler David, 1993.
"Updating Ambiguous Beliefs ,"
Journal of Economic Theory ,
Elsevier, vol. 59(1), pages 33-49, February.
[Downloadable!] (restricted)
Other versions: Epstein Larry G. & Le Breton Michel, 1993.
"Dynamically Consistent Beliefs Must Be Bayesian ,"
Journal of Economic Theory ,
Elsevier, vol. 61(1), pages 1-22, October.
[Downloadable!] (restricted)
Mariano Tommasi & Andrés Velasco, 1995.
"Where Are We in the Political Economy of Reform? ,"
Working Papers
11, Universidad de San Andres, Departamento de Economia, revised Apr 1996.
Other versions: Jones, Robert A & Ostroy, Joseph M, 1984.
"Flexibility and Uncertainty ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 51(1), pages 13-32, January.
[Downloadable!] (restricted)
Other versions: Weil, Philippe, 1990.
"Nonexpected Utility in Macroeconomics ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 105(1), pages 29-42, February.
[Downloadable!] (restricted)
Alesina, Alberto & Cukierman, Alex, 1990.
"The Politics of Ambiguity ,"
The Quarterly Journal of Economics ,
MIT Press, vol. 105(4), pages 829-50, November.
[Downloadable!] (restricted)
Other versions: Kreps, David M & Porteus, Evan L, 1978.
"Temporal Resolution of Uncertainty and Dynamic Choice Theory ,"
Econometrica ,
Econometric Society, vol. 46(1), pages 185-200, January.
[Downloadable!] (restricted)
Kahn, Barbara E & Sarin, Rakesh K, 1988.
" Modeling Ambiguity in Decisions under Uncertainty ,"
Journal of Consumer Research: An Interdisciplinary Quarterly ,
University of Chicago Press, vol. 15(2), pages 265-72, September.
Lohmann, Susanne, 1992.
"Optimal Commitment in Monetary Policy: Credibility versus Flexibility ,"
American Economic Review ,
American Economic Association, vol. 82(1), pages 273-86, March.
[Downloadable!] (restricted)
Aasim M. Husain & Ratna Sahay, 1992.
"Does Sequencing of Privatization Matter in Reforming Planned Economies ,"
IMF Working Papers
92/13, International Monetary Fund.
Schoemaker, Paul J H, 1982.
"The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations ,"
Journal of Economic Literature ,
American Economic Association, vol. 20(2), pages 529-63, June.
[Downloadable!] (restricted)
R. B. Johnston, 1994.
"The Speed of Financial Sector Reform: Risks and Strategies ,"
IMF Policy Discussion Papers
94/26, International Monetary Fund.
Susan Mary George & Leonardo Auernheimer, 1997.
"Shock Versus Gradualism in Models of Rational Expectations: The Case of Trade Liberalization ,"
IMF Working Papers
97/122, International Monetary Fund.
Einhorn, Hillel J & Hogarth, Robin M, 1986.
"Decision Making under Ambiguity ,"
Journal of Business ,
University of Chicago Press, vol. 59(4), pages S225-50, October.
[Downloadable!] (restricted)
Fernandez, Raquel & Rodrik, Dani, 1991.
"Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty ,"
American Economic Review ,
American Economic Association, vol. 81(5), pages 1146-55, December.
[Downloadable!] (restricted)
Camerer, Colin & Weber, Martin, 1992.
" Recent Developments in Modeling Preferences: Uncertainty and Ambiguity ,"
Journal of Risk and Uncertainty ,
Springer, vol. 5(4), pages 325-70, October.
Kahneman, Daniel & Tversky, Amos, 1979.
"Prospect Theory: An Analysis of Decision under Risk ,"
Econometrica ,
Econometric Society, vol. 47(2), pages 263-91, March.
[Downloadable!] (restricted)
Auernheimer, Leonardo & George, Susan Mary, 1997.
"Shock versus gradualism in models of rational expectations: the case of trade liberalization ,"
Journal of Development Economics ,
Elsevier, vol. 54(2), pages 307-322, December.
[Downloadable!] (restricted)
Alan J. Auerbach & Kevin A. Hassett, 1999.
"Uncertainty and the Design of Long-Run Fiscal Policy ,"
NBER Working Papers
7036, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Rodrik, Dani, 1993.
"The Positive Economics of Policy Reform ,"
American Economic Review ,
American Economic Association, vol. 83(2), pages 356-61, May.
[Downloadable!] (restricted)
Segal, Uzi, 1987.
"The Ellsberg Paradox and Risk Aversion: An Anticipated Utility Approach ,"
International Economic Review ,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 175-202, February.
[Downloadable!] (restricted)
Other versions: Cesar Martinelli & Mariano Tommasi, 1993.
"Sequencing of Economic Reforms in the Presence of Political Constraints ,"
UCLA Economics Working Papers
701, UCLA Department of Economics.
[Downloadable!]
Blanchard, Olivier J., 1985.
"Credibility, disinflation and gradualism ,"
Economics Letters ,
Elsevier, vol. 17(3), pages 211-217.
[Downloadable!] (restricted)
P. Lian & S.-J. Wei, 1998.
"To Shock or Not to Shock? Economics and Political Economy of Large-Scale Reforms ,"
Economics and Politics ,
Blackwell Publishing, vol. 10(2), pages 161-183, 07.
[Downloadable!] (restricted)
Loomes, Graham & Sugden, Robert, 1986.
"Disappointment and Dynamic Consistency in Choice under Uncertainty ,"
Review of Economic Studies ,
Blackwell Publishing, vol. 53(2), pages 271-82, April.
[Downloadable!] (restricted)
Dewatripont, Mathias & Roland, Gerard, 1995.
"The Design of Reform Packages under Uncertainty ,"
American Economic Review ,
American Economic Association, vol. 85(5), pages 1207-23, December.
[Downloadable!] (restricted)
Other versions: Kunreuther, Howard & Meszaros, Jacqueline & Hogarth, Robin M. & Spranca, Mark, 1995.
"Ambiguity and underwriter decision processes ,"
Journal of Economic Behavior & Organization ,
Elsevier, vol. 26(3), pages 337-352, May.
[Downloadable!] (restricted)
Eduardo Borensztein, 1993.
"The Strategy of Reform in the Previously Centrally-Planned Economies of Eastern Europe: Lessons and Challenges ,"
IMF Policy Discussion Papers
93/6, International Monetary Fund.
Johnston, R Barry, 1994.
"The Speed of Financial Sector Reform: Risks and Strategies ,"
IMF Papers on Policy Analysis and Assessments
94/26, International Monetary Fund.
Samuelson, William & Zeckhauser, Richard, 1988.
" Status Quo Bias in Decision Making ,"
Journal of Risk and Uncertainty ,
Springer, vol. 1(1), pages 7-59, March.
Rina Bhattacharya, 1999.
"Political Economy Aspects of Trade and Financial Liberalization - Implications for Sequencing ,"
IMF Working Papers
99/159, International Monetary Fund.
Henry, Claude, 1974.
"Investment Decisions Under Uncertainty: The "Irreversibility Effect." ,"
American Economic Review ,
American Economic Association, vol. 64(6), pages 1006-12, December.
[Downloadable!] (restricted)
Cukierman, Alex & Liviatan, Nissan, 1992.
"The Dynamics of Optimal Gradual Stabilizations ,"
World Bank Economic Review ,
Oxford University Press, vol. 6(3), pages 439-58, September.
Other versions:
Full
references Cited by : (explanations , 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.)
S. Nuri Erbas, 2003.
"IMF Conditionality and Program Ownership: A Case for Streamlined Conditionality ,"
IMF Working Papers
03/98, International Monetary Fund.
[Downloadable!]
Access and
download statistics Did you know? Want to help out with this project? Look for volunteer opportunities .
This page was last updated on 2009-11-20.
This information is provided to you by IDEAS at the Department of Economics , College of Liberal Arts and Sciences , University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics .