Credibility of Economic Policy

Review Questions

  1. Verify the numerical solutions to the Expectations and Policy Outcomes Model.

  2. In the state procurement reform scenario, what are the numerical costs and benefits to the government of reversing its procurement policy after a year?

  3. From a credibility perspective, what are the differences between New Zealand's macroeconomic principles and Bolivia's decree to promote private investment?

  4. How might have Argentina's macroeconomic history shaped its decision to adopt a currency board?

  5. Why might participants in informal markets prefer to be illegal rather than subject to legal and administrative institutions?

Policy Credibility Learning Module