Self-Enforcing International Agreements and Domestic Policy Credibility

Paola Conconi () and Carlo Perroni

No CESifo Working Paper No. 988, CESifo Working Paper Series from CESifo Group Munich

Abstract: We explore the relationship between international policy coordination and domestic policy credibility when both must be self-supporting. Our arguments are presented in the context of a two-country, two-period model of dynamic emission abatement with transboundary pollution, where government policies suffer from a time-consistency problem. In the absence of repeated interaction, any form of coordination - between governments, and between governments and their respective private sectors - improves policy making. Nevertheless, under repeated interaction international policy spillovers can make it possible to overcome the domestic credibility problem; and, conversely, the inability to precommit to policy domestically can help support international policy cooperation.

Keywords: policy commitment; self-enforcing international agreements (search for similar items in EconPapers)
JEL-codes: C73 F42 H20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-reg
Date: 2003
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