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Self-enforcing international agreements and domestic policy credibility

By Paola Conconi and Carlo Perroni

Abstract

We explore the relationship between international policy coordination and domestic policy credibility when both must be self-supporting. Our arguments are presented in the context of a two-country, two-period model of dynamic emission abatement with transboundary pollution, where government policies suffer from a time-consistency problem. In the absence of repeated interaction, any form of coordination – between governments, and between governments and their respective private sectors – improves policy making. Nevertheless, under repeated interaction international policy spillovers can make it possible to overcome the domestic credibility problem; and, conversely, the inability to precommit to policy domestically can help support international policy cooperation

Topics: HG, JZ
Publisher: University of Warwick. Centre for the Study of Globalisation and Regionalisation
Year: 2003
OAI identifier: oai:wrap.warwick.ac.uk:2005

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