Year: 2000
Type: report
Abstract: I discuss the role of learning in economic policy choices. I test whether choices of policies are driven by experience under them. A Bayesian approach is adopted to tackle this issue and hence, the paper is also an account of the possibilities and limits of this approach. The decision to sign IMF agreements is used as illustration. The model of rational learning suggests that governments are more likely to enter into agreements with the IMF after learning from their own and from the world experience that average results under agreements are better. Also, governments are prone to take risks when they observe very good performers under IMF agreements at the world and at the regional level. However, they are unlikely to continue under a policy that is costly as soon as growth resumes in the region. The rationalistic reading of this behavior is that governments avoid remaining under a costly policy in isolation. A more detailed research is needed in order to adjudicate among this account of switches and an alternative one that emphasizes deviations to the rational rule as the ultimate cause of choices.
Source: Econstor (Econstor)
Author: Covadonga Meseguer Yebra
Institution: New York University
Language: English
Topic: Policy Transfer and Learning
Field: Social Sciences
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1501450666