After decades of government growth, Western countries have witnessed major policy reversals. Prominent examples include the far-reaching policy reversals implemented by Thatcher, Reagan, and Douglas. This paper offers an explanation for these policy reversals. Our key argument rests on the assumptions that public decisions are made by majority rule and that voters have incomplete information about the aggregate consequences of all possible bundles of public projects making up the government. Unlike existing explanations, our theory is consistent with the observations that policy reversals are often undertaken simultaneously and that separate parts of the package of policy reversals are not welcomed enthusiastically by voters.

majority voting, policy reversal, size of the government
Positive Analysis of Policy-Making and Implementation (jel D78), National Government Expenditures and Related Policies: General (jel H50)
hdl.handle.net/1765/7798
Tinbergen Institute Discussion Paper Series
Tinbergen Institute

Dur, A.J, & Swank, O.H. (1997). A Theory of Policy Reversal (No. TI 97-079/1). Tinbergen Institute Discussion Paper Series. Retrieved from http://hdl.handle.net/1765/7798