Crises, Uncertainty, and Policy Choice: Theory and Evidence from Lebanon

Mounir Mahmalat ()
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Mounir Mahmalat: The Policy Initiative

No 1630, Working Papers from Economic Research Forum

Abstract: This paper presents a simple framework to analyze the micro mechanisms by which crises change policymaking. I conceptualize crises as moments of uncertainty in which political actors cannot anticipate the distribution of power in a post-crisis regime. The core argument of the framework is that the policy choices of policymakers during uncertainty depend on the incentives imposed by a polity of how politicians rally political support in a post-crisis regime. I illustrate the implications of the framework by focusing on the case of Lebanon, a fractionalized polity in which politicians derive their power from provisioning clientelist services, rather than electoral incentives. By leveraging a novel dataset on legislative activity, I show that these incentives change the choice of policy instruments in that, in the wake of uncertainty, politicians shift attention to administrative and personalized policy measures, rather than regulatory measures that can address a crisis. The results contribute to explaining why crises can fail to induce policy change as well as ambiguous results in the literature on the political economy of reform.

Pages: 26
Date: 2023-03-20, Revised 2023-03-20
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