In a World with Many Targets, One-Dimensional Target Indicators Will Always Be Bypassed

Gert Wagner

No 1982, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: It is striking that economists in particular firmly believe in the benefits of rule-binding, even though this belief runs counter to the standard assumption of economic theory that we humans are self-interested and therefore extremely resourceful when it comes to circumventing inconvenient government regulations, e.g. taxes. In Public Choice Theory, politicians are even assumed to have nothing but self-interest as their guiding motive for action. Why then, in this world of thought, should ultra-self-interested politicians of all people adhere to simple rules such as the debt brake instead of bypass them, if – as is also assumed in this model world – all that matters to them is short-term electoral success, for which government debt can be helpful.

Keywords: Rule-binding; Champbell; Goodhart’s Law; Hobbes (search for similar items in EconPapers)
JEL-codes: B10 B20 K00 P16 (search for similar items in EconPapers)
Pages: 5 p.
Date: 2021
New Economics Papers: this item is included in nep-his and nep-hpe
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