Elsevier

World Development

Volume 25, Issue 8, August 1997, Pages 1187-1203
World Development

The old theory of economic policy and the new institutionalism

https://doi.org/10.1016/S0305-750X(97)00037-5Get rights and content
Under a Creative Commons license
open archive

Abstract

In economics, recent emphasis on institutions suggests new policy dimensions for the traditional theory of economic policy which originated with Tinbergen and others at the time of the Keynesian revolution. The paper presents elements of the traditional view—instruments, targets, and policy models—and then considers new aspects of policy, especially policy for structural change. The discussion emphasizes the implications for institutional design of incomplete knowledge, and endogenous politics. Both public and private actors rely on incomplete policy models, and the models themselves can become (intermediate) targets of policy.

Keywords

new institutionalism
policy
instruments and targets
information and uncertainty
structural change
political economy
Hoover Institution

Cited by (0)

I thank the Bradley Foundation for funding, and members of the Max Planck Institute for Research into Economic Systems in Jena for their comments during a presentation. I also thank two reviewers of this journal. The original version of the essay (with a different title) was prepared for a Workshop on Economic Transformation, Institutional Change. Property Rights, and Corruption, organized by The National Academy of Sciences/National Research Council, Commission on Behavioral and Social Sciences and Education, Washington, DC. I thank participants of the workshop for valuable comments.