Who Adjusts and When? On the Political Economy of Reforms

32 Pages Posted: 7 Feb 2006

See all articles by Alberto F. Alesina

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Silvia Ardagna

National Bureau of Economic Research (NBER); Goldman Sachs - London

Francesco Trebbi

Vancouver School of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2006

Abstract

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.

Suggested Citation

Alesina, Alberto F. and Ardagna, Silvia and Trebbi, Francesco, Who Adjusts and When? On the Political Economy of Reforms (February 2006). Harvard Institute of Economic Research Discussion Paper No. 2108. Available at SSRN: https://ssrn.com/abstract=881803 or http://dx.doi.org/10.2139/ssrn.881803

Alberto F. Alesina (Contact Author)

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-495-8388 (Phone)
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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Silvia Ardagna

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
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Goldman Sachs - London ( email )

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Francesco Trebbi

Vancouver School of Economics ( email )

University of British Columbia
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Vancouver Canada, BC V6T 1L4
Canada

HOME PAGE: http://faculty.arts.ubc.ca/ftrebbi/

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

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