credible government policies

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1、Chapter23CredibleGovernmentPolicies,I23.1.IntroductionKydlandandPrescott(1977)openedthemoderndiscussionoftimeconsistencyinmacroeconomicswithsomeexamplesthatshowhowoutcomesdifferinother-wiseidenticaleconomieswhentheassumptionsaboutthetimingofgovernmentpolicychoic

2、esarealtered.1Inparticular,theycomparedatimingprotocolinwhichagovernmentchoosesits(possiblyhistory-contingent)policiesonceandforallatthebeginningoftimewithoneinwhichthegovernmentchoosessequentially.Becauseoutcomesareworsewhenthegovernmentchoosessequen-tially,Ky

3、dlandandPrescott’sexamplesillustratethevaluetoagovernmentofhavinga“commitmenttechnology”thatrequiresitnottochoosesequentially.Subsequentworkontimeconsistencyfocusedonhowareputationcansubsti-tuteforacommitmenttechnologywhenthegovernmentchoosessequentially.2Theis

4、sueiswhetherconstraintsconfrontingthegovernmentandprivatesec-torexpectationscanbearrangedsothatagovernmentadherestoanexpectedpatternofbehaviorbecauseitwouldworsenitsreputationifitdidnot.A“folktheorem”fromgametheorystatesthatifthereisnodiscountingoffuturepayoffs,

5、thenvirtuallyanyfirst-periodpayoffcanbesustainedasareputationalequilibrium.Amainpurposeofthischapteristostudyhowdis-countingmightshrinkthesetofoutcomesthatareattainablewithareputationalmechanism.Modernformulationsofreputationalmodelsofgovernmentpolicyuseandextend

6、ideasfromdynamicprogramming.Eachperiod,agovernmentfaceschoiceswhoseconsequencesincludeafirst-periodreturnandareputationto1Considertwoextensive-formversionsofthe“battleofthesexes”gamedescribedbyKreps(1990),oneinwhichthemanchoosesfirst,theotherinwhichthewomanchoose

7、sfirst.Backwardinductionrecoversdifferentoutcomesinthesetwodifferentgames.Thoughtheysharethesamechoicesetsandpayoffs,thesearedifferentgames.2BarroandGordon(1983a,1983b)areearlycontributorstothisliterature.SeeKennethRogoff(1989)forasurvey.–937–938CredibleGovernmentPol

8、icies,Ipassontonextperiod.Underrationalexpectations,anyreputationthatthegovernmentcarriesintonextperiodmustbeonethatitwillwanttoconfirm.Weshallstudythesetofpossiblevaluesthat