Publication: Learning Dynamics and Support for Economic Reforms: Why Good News Can Be Bad
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Published
2016-01
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1564-698X
Date
2017-08-09
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Support for economic reforms has often shown puzzling dynamics: many reforms that began successfully lost public support. We show that learning dynamics can rationalize this paradox because the process of revealing reform outcomes is an example of sampling without replacement. We show that this concept challenges the conventional wisdom that one should begin by revealing reform winners. It may also lead to situations in which reforms that enjoy both ex ante and ex post majority support will still not come to completion. We use our framework to explain why gradual reforms worked well in China (where successes in Special Economic Zones facilitated further reform), whereas this was much less the case for Latin American and Central and Eastern European countries.
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“van Wijnbergen, Sweder J.G.; Willems, Tim. 2016. Learning Dynamics and Support for Economic Reforms: Why Good News Can Be Bad. World Bank Economic Review. © World Bank. http://hdl.handle.net/10986/27690 License: CC BY-NC-ND 3.0 IGO.”
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World Bank Economic Review
1564-698X
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