Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 1451926472
Total Pages : 40 pages
Book Rating : 4.4/5 (519 download)
Book Synopsis Externalities. Incentives, and Economic Reforms by : International Monetary Fund
Download or read book Externalities. Incentives, and Economic Reforms written by International Monetary Fund and published by International Monetary Fund. This book was released on 1990-01-01 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper emphasizes the role of institutions and incentives in the presence of externalities. An economy with multiple public decision makers is likely to experience “overspending,” “undertaxing,” “overborrowing,” and “overinflation” unless effective institutions exist for overcoming coordination failure. External financing may weaken incentives for adjustment over the longer run unless assistance is made conditional on fundamental institutional reforms. The paper also analyzes reforms that strengthen incentives to provide effort. Uncertainty regarding future taxes reduces present effort and the responsiveness of output to market signals. In addition, the paper addresses the adverse effects of bank insurance and soft budget constraints.