Uncertainty and economic reforms

Carsten Hefeker and Michael Neugart

Chapter 114 in Elgar Encyclopedia of Public Choice, 2025, pp 805-810 from Edward Elgar Publishing

Abstract: This chapter discusses the role of uncertainty in economic reforms. We distinguish between individual and aggregate uncertainty, where either only individuals or whole societies are uncertain about the consequences and desirability of economic reforms. We also discuss mechanisms to overcome the unwillingness to accept reforms, particularly the incentive to free-ride on the reform efforts of other jurisdictions, and show that it can be overcome by designing an adequate subsidy and insurance system that fosters economic reforms.

Keywords: Uncertainty; Economic Reforms; Sequencing; Knowledge Spillovers; Insurance; Subsidies (search for similar items in EconPapers)
Date: 2025
ISBN: 9781802207743
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