How can governments guide people to make choices that would improve their welfare? Traditionally, the focus has been on changing prices; for instance, higher cigarette taxes encourage people to smoke less. Lately, “nudges” have become a favorite tool, and are becoming increasingly popular in developed and developing countries alike. Latin American governments are no … [Read more...] about The Do’s and Don’ts of “Nudging”
Governments and international donors have long struggled to ensure accountability in large projects where patronage, inefficiency or outright corruption can lead to misallocation of resources and funds. One innovation has been the creation of community-monitoring initiatives that allow citizens to provide feedback on projects. Proponents believe such social audits not only … [Read more...] about Can Citizens Act Effectively as Watchdogs?
The performance of the world economy has been disappointing to say the least. After the Great Moderation came the Great Recession, but since 2009 the world has been suffering from a Great Suppression (GS). In Japan, growth is being suppressed by a liquidity trap with interest rates firmly at the zero bound. In the Eurozone, high debts and private sector deleveraging are … [Read more...] about The Great Suppression: What should LAC Expect in the New Year?
Among Latin American nations, Chile has achieved rare success in developing strong macroeconomic fundamentals, a transparent regulatory system, and improving in other indicators of economic and social wellbeing. That should come as no surprise. Chile has good policy features and strong government capabilities. Its congress consists largely of well-educated politicians with … [Read more...] about The Weakest Link: Government Capabilities in Latin America and the Caribbean
Experts often try to identify the “right” policies for enhancing development. Should public utility companies be in private or public hands? Are pay-as-you-go social security systems more sustainable than fully funded systems? Do industrial policies work? Do capital controls reduce external risks? But experience is a hard tutor. It teaches that the search for a universal set … [Read more...] about A Public Policy Report Card for the Region