The political economy of 'policy credibility': the new-classical macroeconomics and the remaking of emerging economies

Author: Grabel I.

Source: Cambridge Journal of Economics, Volume 24, Number 1, January 2000 , pp. 1-19(19)

Buy & download fulltext article:

Price: $44.11 plus tax (Refund Policy)

Abstract:

The criterion of 'policy credibility' is invoked with increasing frequency today by new-classical development economists in debates over economic and institutional reform in developing and transitional countries. The paper argues that the credibility criterion is used to privilege neoliberal economic policies and associated institutions. The paper demonstrates that the credibility criterion is theoretically anti-pluralist and politically anti-democratic. In this connection, the paper argues that a policy's credibility is always secured endogenously through political and economic power rather than exogenously by virtue of the epistemiological status of the theory that promotes it. The paper concludes by suggesting two alternative criteria by which policy regimes and the governance structure of monetary institutions could be adjudicated. These alternative criteria are termed the 'principle of democratic credibility' and the 'principle of fallibility'.

Keywords: Policy credibility; Central banking; Currency boards; Development policy; New-classical economics

Document Type: Original article

Affiliations: E-mail: igrabel@du.edu Graduate School of International Studies, University of Denver, Denver, CO 80208, USA

Publication date: 2000-01-01

More about this publication?

The Cambridge Journal of Economics, founded in 1977 in the traditions of Marx, Keynes, Kalecki, Joan Robinson and Kaldor, provides a forum for theoretical, applied, policy and methodological research into social and economic issues.