In a World with Many Targets, One-Dimensional Target Indicators Will Always Be Bypassed

Discussion Papers 1982, 5 S.

Gert G. Wagner

2021

get_appDownload (PDF  425 KB)

Abstract

It is striking that economists in particular firmly believe in the benefits of rule-binding, even though this belief runs counter to the standard assumption of economic theory that we humans are self-interested and therefore extremely resourceful when it comes to circumventing inconvenient government regulations, e.g. taxes. In Public Choice Theory, politicians are even assumed to have nothing but self-interest as their guiding motive for action. Why then, in this world of thought, should ultra-self-interested politicians of all people adhere to simple rules such as the debt brake instead of bypass them, if – as is also assumed in this model world – all that matters to them is short-term electoral success, for which government debt can be helpful

Gert G. Wagner

Senior Research Fellow in the German Socio-Economic Panel study Department



JEL-Classification: B10;B20;K00;P16
Keywords: rule-binding, Champbell, Goodhart’s Law, Hobbes

keyboard_arrow_up