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The Institutional Foundations of Public Policy

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  • Mariano Tommasi

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Abstract

The effects of public policies on social and economic outcomes depend on some fundamental state capacities, such as the ability to commit to a policy course; the ability to adjust policies when circumstances change; and the ability to coordinate, enforce, and implement policies. In a democratic polity, such capabilities are built on some degree of consensus and intertemporal cooperation among key political actors; better policies emerge if participants in the policymaking process can cooperate with one another to uphold agreements and sustain them over time. This paper explores the institutional determinants of such capabilities, with a focus on the political system. It argues that effective public policies are facilitated by institutionalized and programmatic political parties, legislators with sound policymaking capabilities, independent judiciaries, and strong bureaucracies. Such institutional blessings" develop slowly over time, and the incentives of politicians and government officials, as well as their interaction with other societal actors, are crucial for their development. The paper concludes by warning economists and other policy specialists that institutions and processes might be more important than policies. Advocates and advisors have to think twice before forcing a favorite policy onto a polity at the expense of violating principles such as a reasonable degree of societal consensus, congressional debate, or judicial independence."

Suggested Citation

  • Mariano Tommasi, 2006. "The Institutional Foundations of Public Policy," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Spring 20), pages 1-36, January.
  • Handle: RePEc:col:000425:008654
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    References listed on IDEAS

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    1. Calvo, Guillermo A. & Drazen, Allan, 1998. "Uncertain Duration Of Reform," Macroeconomic Dynamics, Cambridge University Press, vol. 2(04), pages 443-455, December.
    2. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
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    4. Mariano Tommasi & Andres Velasco, 1996. "Where are we in the political economy of reform?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 1(2), pages 187-238.
    5. Pablo T. Spiller, 2003. "The Institutional Foundations of Public Policy: A Transactions Approach with Application to Argentina," Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(2), pages 281-306, October.
    6. Avinash Dixit, 2003. "Some Lessons from Transaction-Cost Politics for Less-Developed Countries," Economics and Politics, Wiley Blackwell, vol. 15(2), pages 107-133, July.
    7. Mariano Tommasi & Pablo T. Spiller & Ernesto Stein, 2003. "Political Institutions, Policymaking Processes, and Policy Outcomes. An Intertemporal Transactions Framework," Working Papers 59, Universidad de San Andres, Departamento de Economia, revised Jul 2003.
    8. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4303, Inter-American Development Bank, Research Department.
    9. Avinash Dixit & Gene M. Grossman & Faruk Gul, 2000. "The Dynamics of Political Compromise," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 531-568, June.
    10. Harberger, Arnold C, 1993. "The Search for Relevance in Economics," American Economic Review, American Economic Association, vol. 83(2), pages 1-16, May.
    11. Mariano Tommasi & Matias Iaryczower & Pablo T. Spiller, 2002. "Judicial Decision Making in Unstable Environments, Argentina 1935-1998," Working Papers 30, Universidad de San Andres, Departamento de Economia, revised Oct 2002.
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    Cited by:

    1. Meloni, Osvaldo, 2011. "Budget Manipulation and Vertical Fiscal Imbalance," MPRA Paper 50694, University Library of Munich, Germany.
    2. Roberto Cortes Conde, 2008. "Spanish America Colonial Patterns: The Rio de La Plata," Working Papers 96, Universidad de San Andres, Departamento de Economia, revised Mar 2008.
    3. Martin Ardanaz & Marcelo Leiras & Mariano Tommasi, 2012. "The Politics of Federalism in Argentina: Implications for Governance and Accountability," Research Department Publications 4781, Inter-American Development Bank, Research Department.
    4. Mariano Tommasi & Miguel Braun, 2002. "Fiscal Rules for Subnational Governments. Some Organizing Principles and Latin American Experiences," Working Papers 44, Universidad de San Andres, Departamento de Economia, revised Mar 2002.
    5. Mariano Tommasi & Silvana Tenreyro, 2001. "Comments on Dani Rodrik's "Why Is There So Much Economic Insecurity in Latin America?"," Working Papers 28, Universidad de San Andres, Departamento de Economia, revised Mar 2001.
    6. Mariano Tommasi & Pablo T. Spiller, 2004. "The Institutions of Regulation," Working Papers 67, Universidad de San Andres, Departamento de Economia, revised Mar 2004.
    7. José Bercoff & Osvaldo Meloni, 2009. "Federal budget allocation in an emergent democracy: evidence from Argentina," Economics of Governance, Springer, vol. 10(1), pages 65-83, January.
    8. Mariano Tommasi & Pablo T. Spiller & Ernesto Stein, 2003. "Political Institutions, Policymaking Processes, and Policy Outcomes. An Intertemporal Transactions Framework," Working Papers 59, Universidad de San Andres, Departamento de Economia, revised Jul 2003.
    9. Carlos Scartascini & Mariano Tommasi & Martín Ardanaz, 2010. "Political Institutions, Policymaking, and Economic Policy in Latin America," IDB Publications (Working Papers) 1708, Inter-American Development Bank.
    10. Jeronimo Zettelmeyer, 2006. "Growth and Reforms in Latin America; A Survey of Facts and Arguments," IMF Working Papers 06/210, International Monetary Fund.
    11. Klaus Schmidt-Hebbel, 2012. "The Political Economy of Distribution and Growth in Chile," Documentos de Trabajo 417, Instituto de Economia. Pontificia Universidad Católica de Chile..
    12. Alejandro Bonvecchi, 2010. "The Political Economy of Fiscal Reform in Latin America: The Case of Argentina," Research Department Publications 4666, Inter-American Development Bank, Research Department.

    More about this item

    Keywords

    public policies; political system; institutions;

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation

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