Optimal Checks and Balances Under Policy Uncertainty

28 Pages Posted: 20 May 2020

See all articles by Gabriele Gratton

Gabriele Gratton

UNSW Australia Business School, School of Economics

Massimo Morelli

Bocconi University

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Date Written: May 2020


Political checks and balances are certainly among the most debated desiderata in the construction of democratic systems and their evaluation. This paper suggests a conceptual framework that could be useful to inform this debate. We propose a model where the pros and cons of a strengthening of checks and balances are respectively the reduction of type-I errors and the increase of potential type-II errors in policy decision-making. Checks and balances are less desirable for intermediate levels of competence of the political class and more desirable when the bureaucracy is slower or when the political system involves frequent turnover, and in policy areas where the welfare effects of a reform are harder to evaluate and effective accountability is low.

Keywords: Checks and balances, effective accountability, Information, Uncertain policy quality

Suggested Citation

Gratton, Gabriele and Morelli, Massimo, Optimal Checks and Balances Under Policy Uncertainty (May 2020). CEPR Discussion Paper No. DP14745, Available at SSRN: https://ssrn.com/abstract=3603977

Gabriele Gratton (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052

Massimo Morelli

Bocconi University ( email )

Via Roentgen 1
Milan, 20136

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