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Political Risk Aversion / Laura Valderrama.
- Format:
- Book
- Government document
- Author/Creator:
- Valderrama, Laura.
- Series:
- IMF Working Papers; Working Paper ; No. 2009/194
- IMF Working Papers
- Language:
- English
- Subjects (All):
- Uncertainty.
- Rational expectations (Economic theory).
- Physical Description:
- 26 p. : ill.
- Edition:
- 1st ed.
- Place of Publication:
- Washington, D.C. : International Monetary Fund, 2009.
- Language Note:
- English
- Summary:
- This paper studies the effect of individual uncertainty on collective decision-making to implement innovation. We show how individual uncertainty creates a bias for the status quo even under irreversible voting decisions, in contrast with Fernandez and Rodrik (1991). Blocking innovation is rooted in the aversion to the potential loss of political clout in future voting decisions. Thus, risk neutral individuals exhibit what we call political risk aversion. Yet individual uncertainty is not all bad news as it may open the door to institutional reform. We endogenize institutional reform and show a non-monotonic relationship between institutional efficiency and the size of innovation.
- Contents:
- Cover Page
- Title Page
- Copyright Page
- Contents
- I. Introduction
- II. Basic Model
- A. Economic Environment
- B. Technology Choice
- C. Aggregate Uncertainty
- III. Institutional Reform
- A. Outside Ownership
- B. Endogenizing Ownership
- C. Dominated Employee Ownership
- IV. Efficieny, Innovation, and Labor Mobility
- A. Partnership Efficiency
- 1. Technological and Institutional Efficiency
- B. Institutional Efficiency
- 2. Endogeneous ownership
- V. Discussion
- A. How does the model fit the facts?
- B. Foundations of Individual Uncertainty
- C. Heterogeneous Investors
- VI. Related Literature
- VII. Concluding Remarks
- References
- Footnotes.
- Notes:
- Bibliographic Level Mode of Issuance: Monograph
- Includes bibliographical references.
- Description based on print version record.
- ISBN:
- 9786612844034
- 9781462391080
- 1462391087
- 9781452709703
- 145270970X
- 9781282844032
- 1282844032
- 9781451873412
- 1451873417
- OCLC:
- 649468877
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