Economics versus Politics: Pitfalls of Policy Advice

摘要

The fundamental approach to policy prescription in economics derives from the recognition that the presence of market failures-like externalities, public goods, monopoly, and imperfect competition-creates room for well-designed public interventions to improve social welfare. This tradition, already clear in Pigou (1912), was elaborated by Samuelson (1947), and still provides the basis of most policy advice provided by economists. For example, the first development economists in the 1950s used market-failure-inspired ideas as the intellectual basis for the need for government intervention to promote development in poor countries (Killick 1978).