Working Paper: NBER ID: w9596
Authors: Louis Kaplow
Abstract: Legal change, whether through legislation, regulation, or court decision, is a common phenomenon, and virtually all reform creates both gains and losses for those who under the prior regime took actions that would have lasting effects. This article offers a conceptual framework for assessing the desirability of different transition policies, ranging from compensation of losses and taxation of gains, grandfathering of pre-enactment investments, and delayed or partial implementation to complete and immediate implementation or even retroactive application. Emphasis is placed on how transitions and various mitigation strategies affect the incentives of and risk borne by private actors as well as on the behavior of government and how it may be affected by transition policy.
Keywords: No keywords provided
JEL Codes: H20; K11; K34; K40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| legal transitions (J62) | gains and losses (G41) |
| transition policies (P21) | incentives (M52) |
| compensation for losses (G33) | reduce incentive for investment (E22) |
| taxing gains (H24) | discourage future activities (K42) |
| transition policies (P21) | government behavior (H10) |
| ignoring losses (G41) | neglect of gains (J17) |