Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2023-10-12
Number: 23-060/VII
Author-Name: Josse Delfgaauw
Author-Workplace-Name: Erasmus University Rotterdam
Author-Name: Otto H. Swank
Author-Workplace-Name: Erasmus University Rotterdam
Title: The Political Economy of Commitment to Policies
Abstract: IPCC (2022) documents a looming gap between climate goals and implemented policies and points to a lack of political commitment. We study policymakers' incentives to commit. A policymaker decides on a policy to encourage citizens to make investments and determines the degree of flexibility to change the policy after investments have been made. This adds redistributive concerns to the trade-off between commitment and flexibility. When a majority of citizens invest, redistributive concerns alleviate the time-inconsistency problem. When a minority of citizens invest, redistributive concerns aggravate the time-inconsistency problem. Then, the policymaker either commits too strongly or refrains from commitment altogether.
Classification-JEL: D72, D78, H23, Q52
Keywords: commitment, flexibility, redistribution, median voter, climate
File-URL: https://papers.tinbergen.nl/23060.pdf
File-Format: application/pdf
File-Size: 400.940 bytes
Handle: RePEc:tin:wpaper:20230060