On the efficacy of reforms
Subtitle: policy tinkering, institutional change, and entrepreneurship
By: Murat Iyigun, Dani Rodrik.
Contributors: Rodrik, Dani.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10455; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10455.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Economic policy.; Entrepreneurship.
Description: "We analyze the interplay of policy reform and entrepreneurship in a model where investment decisions and policy outcomes are both subject to uncertainty.  The production costs of non-traditional activities are unknown and can only be discovered by entrepreneurs who make sunk investments.  The policy maker has access to two strategies: policy tinkering,' which corresponds to a new draw from a pre-existing policy regime, and institutional reform,' which corresponds to a draw from a different regime and imposes an adjustment cost on incumbent firms.  Tinkering and institutional reform both have their respective advantages.  Institutional reforms work best in settings where entrepreneurial activity is weak, while it is likely to produce disappointing outcomes where the cost discovery process is vibrant.  We present cross-country evidence that strongly supports such a conditional relationship"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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