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How delegation improves commitment

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  • Perino, Grischa

Abstract

McCallum (1995, American Economic Review Papers and Proceedings 85 (2), 207-211) conjectures that delegation merely relocates the commitment problem but does not solve it. This holds if optimal ex-ante policies do not change if additional information becomes available. However, with a flexibility-credibility trade-off delegation improves credibility.

Suggested Citation

  • Perino, Grischa, 2010. "How delegation improves commitment," Economics Letters, Elsevier, vol. 106(2), pages 137-139, February.
    • Handle: RePEc:eee:ecolet:v:106:y:2010:i:2:p:137-139
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    1. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(4), pages 1169-1189.
    2. Ludema, Rodney D. & Olofsgard, Anders, 2008. "Delegation versus communication in the organization of government," Journal of Public Economics, Elsevier, vol. 92(1-2), pages 213-235, February.
    3. Lohmann, Susanne, 1992. "Optimal Commitment in Monetary Policy: Credibility versus Flexibility," American Economic Review, American Economic Association, vol. 82(1), pages 273-286, March.
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    5. Jensen, Henrik, 1997. "Credibility of Optimal Monetary Delegation," American Economic Review, American Economic Association, vol. 87(5), pages 911-920, December.
    6. McCallum, Bennett T, 1995. "Two Fallacies Concerning Central-Bank Independence," American Economic Review, American Economic Association, vol. 85(2), pages 207-211, May.
    7. McCallum, Bennett T., 1997. "Crucial issues concerning central bank independence," Journal of Monetary Economics, Elsevier, vol. 39(1), pages 99-112, June.
    8. Paul Levine & John Stern & Francesc Trillas, 2005. "Utility price regulation and time inconsistency: comparisons with monetary policy," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 447-478, July.
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    Cited by:

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    2. Hahn, Volker, 2014. "An argument in favor of long terms for central bankers," Economics Letters, Elsevier, vol. 122(2), pages 132-135.
    3. Habla, Wolfgang & Winkler, Ralph, 2018. "Strategic delegation and international permit markets: Why linking May fail," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 244-250.
    4. Carlo Cambini & Laura Rondi, 2011. "Independence, Investment and Political Interference: Evidence from the European Union," RSCAS Working Papers 2011/42, European University Institute.
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    7. Cambini, Carlo & Rondi, Laura, 2010. "Regulatory Independence and Political Interference: Evidence from EU Mixed-Ownership Utilities’ Investment and Debt," Institutions and Markets Papers 91002, Fondazione Eni Enrico Mattei (FEEM).
    8. Habla, Wolfgang & Winkler, Ralph, 2015. "Strategic Delegation and Non-cooperative International Permit Markets," Working Papers in Economics 636, University of Gothenburg, Department of Economics.
    9. Spycher, Sarah & Winkler, Ralph, 2022. "Strategic delegation in the formation of modest international environmental agreements," European Economic Review, Elsevier, vol. 141(C).
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    12. Florian Habermacher & Paul Lehmann, 2020. "Commitment Versus Discretion in Climate and Energy Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(1), pages 39-67, May.

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