TY  - JOUR
AU  - Kaplow,Louis
TI  - Government Relief for Risk Associated with Government Action
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3006
PY  - 1993
Y2  - January 1993
UR  - http://www.nber.org/papers/w3006
L1  - http://www.nber.org/papers/w3006.pdf
N1  - Author contact info:
Louis Kaplow
Harvard University
Hauser 322
Cambridge, MA  02138
Tel: 617/495-4101
Fax: 617/496-4880
E-Mail: meskridge@law.harvard.edu
AB  - A significant source of risk arises from uncertainty concerning future government policy. Government action - - tax reform, deregulation, judicial decisions, budgetary shifts - - produces gains and losses for those who invested under preexisting rules. The effects of government relief - - compensation, grandfathering, phase-ins - - on ex ante incentives and risk bearing are examined in a model in which private insurance is taken into account. It is demonstrated that government relief is inefficient, even when private insurance is subject to moral hazard, because relief shields individuals from some of the effects of their actions.
ER  -