Complexity and the Reform Process: The Role of Delegated Policymaking

Dana Foarta and Massimo Morelli

No 22180, BAFFI CAREFIN Working Papers from BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy

Abstract: Many recent reform episodes have led to increased policy complexity: laws and regulations that contain more contingencies, exemptions, and carry high bureaucratic implementation costs. Such complexity may be desirable if it better satisfies the needs of diverse political constituencies. It may be inefficient if it is a byproduct of a changing power balance in the reform process itself. This paper uses a formal model to disentangle these two cases and understand how increased bureaucratic participation in the reform process may create inefficient complexity. When policymaking requires more expertise, better informed bureaucrats may draft complex policies to pander to persuade their less informed political principals. We show that this type of inefficient complexity is the equilibrium outcome when politicians are uncertain about the bureaucracy's reform implementation capacity. Institutional changes that give more power to politicians relative to bureaucrats do not reduce inefficient complexity, and they cannot substitute the need for more bureaucratic capacity.

Keywords: Bureaucratic Capacity; Complex Reforms; Delegated Policymaking (search for similar items in EconPapers)
Pages: 47
Date: 2022
New Economics Papers: this item is included in nep-mic and nep-reg
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