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When are stabilizations delayed? Alesina-Drazen revisited

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  • Martinelli, Cesar
  • Escorza, Raul

Abstract

In an influential article, Alesina and Drazen (1991) model delay of stabilization as the result of a struggle between political groups supporting reform plans with different distributional implications. In this paper we show that ex ante asymmetries in the costs of delay for the groups will reduce the probability of conflict and will lead to a shorter expected delay. Accurate common information about the cost of delay may lead to no delay at all. In an asymmetric conflict, a wider divergence in the distributional implications of reform will reduce the probability of conflict but will lead to a longer expected delay.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 51 (2007)
Issue (Month): 5 (July)
Pages: 1223-1245

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Handle: RePEc:eee:eecrev:v:51:y:2007:i:5:p:1223-1245

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Cited by:
  1. Hannes Andréasson & Niklas Elert & Nils Karlson, 2013. "Does Social Cohesion Really Promote Reforms?," WWWforEurope Working Papers series 33, WWWforEurope.
  2. Grier, Kevin & Lin, Shu, 2009. "Speculative attacks and defenses as wars of attrition," European Journal of Political Economy, Elsevier, vol. 25(4), pages 540-546, December.
  3. Stijn Goeminne & Benny Geys & Carine Smolders, 2008. "Political fragmentation and projected tax revenues: evidence from Flemish municipalities," International Tax and Public Finance, Springer, vol. 15(3), pages 297-315, June.
  4. Kentaro Katayama, 2008. "Delay in Fiscal Reform," Microeconomics Working Papers 23075, East Asian Bureau of Economic Research.
  5. Paulo Júlio, 2011. "Public Debt Stabilization: Redistributive Delays Versus Preemptive Anticipations," GEE Papers 0045, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised Dec 2011.

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