RDP 8801: Time-Consistent Policy: A Survey of the Issues 5. Conclusion

This paper is not intended to be a comprehensive survey of the many recent papers on the issue of reputation and time consistency in policymaking. It has been written with the goal of presenting, in a non-technical way, some of the issues that theoretical economists have been addressing in the last decade in the theory of economic policy formulation. A disturbing feature of many of the conclusions of this literature is the multiplicity of results possible in the various frameworks. This is a feature of the game theoretic solution concepts which are currently available and indeed it may also be a feature of the “real world”. Nonetheless, the recent literature, incorporating the role of political and economic institutions, provides new and potentially useful insights into the theory of economic policy.