Citation

Discussion Paper Details

Please find the details for DP537 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Which Rules Rather than Discretion in a Democracy? An Axiomatic Approach

Author(s): Daniel Cohen and Philippe Michel

Publication Date: April 1991

Keyword(s): Credibility, Macroeconomic Policy and Time Inconsistency

Programme Area(s): International Macroeconomics

Abstract: This paper sets a framework for analysing how memoryless voters may come to elect and re-elect a committed policy-maker. Policy-makers, we assume, are trusted to implement the policy that they announce ex ante (and do implement it, if elected and re-elected). Voters, however, are never bound by their previous votes. With no restrictions imposed on the ex ante announcements of the policy-makers, no commitment is, in general, feasible. (As we argue in the text, the Barro-Gordon framework is an exception.) What we show in the paper is how a (natural) set of axiomatic restrictions imposed on the set of policy announcements may yield an unambiguous stationary state towards which all policy announcements will converge.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=537

Bibliographic Reference

Cohen, D and Michel, P. 1991. 'Which Rules Rather than Discretion in a Democracy? An Axiomatic Approach'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=537