Globalization and the ‘confidence game’

Mukand, Sharun W.

doi:10.1016/j.jinteco.2006.03.001

Cited by 9 publications

(16 citation statements)

References 28 publications

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“…In this sense, it is similar to the costs of delay in a war of attrition model, such as that of the delayed fiscal stabilisation in Alesina and Drazen (1991). Other studies go even farther, e.g., Krugman (1998) and Mukand (2006), who argue that countries sometimes pursue policies that are actually perverse, in an effort to increase investor confidence. Their argument is that in a globalised environment, policy makers may feel the need to pursue policies that would confirm foreign investors’ beliefs about what constitutes good policy.…”

Section: Literature Reviewmentioning

confidence: 88%

The Olympic Effect

Rose

Spiegel

2011

The Economic Journal

210

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Why should countries offer to host costly Ômega-eventsÕ such as the Olympic Games? We show that hosting a mega-event increases exports. This effect is statistically robust, permanent and large; trade is over 20% higher for host countries. Interestingly, unsuccessful bids to host the Olympics have a similar impact on exports. We conclude that the Olympic effect on trade is attributable to the signal a country sends when bidding to host the games, rather than the act of actually holding a mega-event.We develop an appropriate formal model and derive conditions under which liberalising countries will signal through a mega-event bid.

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Section: Literature Reviewmentioning

confidence: 88%

The Olympic Effect

Rose

Spiegel

2011

The Economic Journal

210

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“…The driving force of my basic model is the same as in Mukand () . Mukand shows that, in their eagerness to attract foreign capital, governments sometimes rationally ignore their own information.…”

Section: Introductionmentioning

confidence: 99%

“…My paper actually has more in common with the discussion paper version (Mukand, ), because the published paper has additional features that complicate the model without changing the basic mechanism.…”

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confidence: 99%

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Dancing to the Donors' Tune? Policy Choice in Aid‐Dependent Countries

Hagen

2014

Scandinavian J Economics

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Current aid rhetoric emphasizes the selective allocation of otherwise unconditional funds in support of the recipients' own plans, in contrast to the old donor practice of bundling money and policies. I show that when recipients have private information, policies reflecting their preferences and knowledge might result in such a regime. However, generous transfers can also induce them to conform to the outcome-oriented expectations of donors at the expense of lower aid impact. Such behaviour is consistent with an abundance of case-study evidence. Moderate disagreements over what the optimal policy is could actually produce better results. Certain forms of both donor competition and coordination might also eliminate this distortion, while a donor concern for need only removes incentives for aid-seeking in the least needy countries. In summary, optimal aid policies are highly context-specific, and donors should thus concentrate their efforts to practise more informed selectivity.

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“…Therefore, fear of lower capital flows (and its adverse political and economic consequences) may prevent governments from pursuing policies they know are likely to work best. See Mukand (1999) for an elaboration of this argument.…”

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confidence: 99%