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Policy Competition, Imitation and Coordination under Uncertainty

Author

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  • Carsten Hefeker
Abstract
The paper analyzes under what circumstances policymakers experiment with policies with uncertain outcomes, when they prefer to imitate policies initiated in other countries, and when they prefer to coordinate policies internationally. Policymakers have private costs of active policies and compete internationally in a yardstick competition which gives rise to a potential distortion between what citizens want and what policymakers do. I find that policymakers’ policies as well as regime choice deviate from what citizens want but that an increase in uncertainty about policy outcomes decreases this distortion.

Suggested Citation

  • Carsten Hefeker, 2022. "Policy Competition, Imitation and Coordination under Uncertainty," CESifo Working Paper Series 9736, CESifo.
    • Handle: RePEc:ces:ceswps:_9736
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    uncertainty; policy competition and coordination; yardstick competition;
    All these keywords.

    JEL classification:

    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other

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