Endogenous Policy Formation and the Principle of Optimal Obfuscation: Theory and Some Evidence from Haiti and Jamaica&ast

Anders Danielson and Mats Lundahl
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Anders Danielson: University of Lund
Mats Lundahl: Stockholm School of Economics

Comparative Economic Studies, 1994, vol. 36, issue 3, 78 pages

Abstract: Our paper addresses issues of redistribution within a political economy framework. Focusing initially on the experiences of Haiti and Jamaica, we argue that the rulers of these countries redistribute resources basically in order to improve their chances of staying in power. The methods used to redistribute income are discussed in some detail; in particular, we extend the Magee, Brock and Young hypothesis of “optimal obfuscation” by postulating that rulers attempt to prevent opponents to disclose the actual costs of policies by increasing the costs of such exposure. Further, we generalize our findings into two models of endogenous policy formation—one for a democracy and one for a dictatorship. The equilibrium is specified and the influence of a number of shift parameters is investigated.

Date: 1994
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