The Political Economy of Commitment to Policies

Josse Delfgaauw and Otto H. Swank
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Otto H. Swank: Erasmus University Rotterdam

No 23-060/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

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.

Keywords: commitment; flexibility; redistribution; median voter; climate (search for similar items in EconPapers)
JEL-codes: D72 D78 H23 Q52 (search for similar items in EconPapers)
Date: 2023-10-12
New Economics Papers: this item is included in nep-ene, nep-env and nep-pol
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