Why do sanctions need time to work? Adjustment, learning and anticipation
Economists disagree on the influence of time on the probability of success of economic sanctions. Some argue that it takes time to convince the sanction target. Others stress that economic adjustment will reduce incentives to comply. We seek to reconcile these different literatures, modelling the target's decision to comply as a function of both (anticipatory) economic adjustment and Bayesian learning. We show that sanctions which do not work instantaneously (ie there is neither political compliance nor economic adjustment) can work in the long run, but only if the learning effect dominates the adjustment effect. A sufficient condition for ultimate compliance is that (potential) sanction damage that cannot be avoided by adjustment in the long run exceeds the yield of misconduct.
|Keywords||adjustment, learning, sanctions|
|Persistent URL||dx.doi.org/10.1016/0264-9993(94)00003-N, hdl.handle.net/1765/13078|
van Bergeijk, P.A.G., & van Marrewijk, J.G.M.. (1995). Why do sanctions need time to work? Adjustment, learning and anticipation. Economic Modelling, 75–86. doi:10.1016/0264-9993(94)00003-N