Notes on the State and on the market

Adam Przeworski ()

Brazilian Journal of Political Economy, 1996, vol. 16, issue 3, 451-456

Abstract: This paper discusses the reform of the State under two aspects: “what theState must do” and “what kind of State will provide only what must be done”. First itrevises the history of the State and economy relationship, evidencing the repercussion of thetheory of incomplete markets and incomplete information. Following, the paper analysesthree groups of relations of the “principal-agent” kind: between governments and privateeconomic agents (regulation), politicians and bureaucrats (oversight), and citizens andgovernments (accountability). The conclusion is that the performance of the State dependson the institutional structure of all these mechanisms, and that well-structured institutionswill permit and induce government to intervene in the economy in a superior way than anon-interventionist State. JEL Classification: H11; H61.

Keywords: State reform; structure of government; public expenditure (search for similar items in EconPapers)
Date: 1996
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