Who Adjusts and When? On the Political Economy of Reforms
Alberto F. Alesina
Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)
National Bureau of Economic Research (NBER); Goldman Sachs - London
University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)
Harvard Institute of Economic Research Discussion Paper No. 2108
Why do countries delay stabilizations of large and increasing budget deficits and inflation? And what explains the timing of reforms? We use the war of attrition model as a guidance for our empirical study on a vast sample of countries. We find that stabilizations are more likely to occur when time of crisis occur, at the beginning of term of office of a new government, in countries with 'strong' governments, (i.e. presidential systems and unified governments with a large majority of the party in office), and when the executive faces less constraints. The role of external inducements like IMF programs has at best a weak effect, but problem of reverse causality are possible.
Number of Pages in PDF File: 32working papers series
Date posted: February 7, 2006
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