Governance structures and the durability of economic reforms: evidence from inflation stabilizations
AbstractThis paper investigates the relationship between a country's political-economic and institutional environment, and its ability to implement sustainable economic reform programs. The policy issue on which the study focuses is inflation stabilization. It consists principally of econometric estimations of the relationship between the success of stabilizations in a large sample of countries and several political and economic explanatory variables. The hypotheses tested are drawn both from the recent macroeconomic literature on policy credibility and from political science. The major findings include the following: (1) Despite the "conventional wisdom" to the contrary, political repression does not appear to be an effective means for implementing sustainable stabilization policies. Durable economic reforms and political freedoms appear to be complementary. (2) As has been previously argued theoretically and demonstrated empirically, political instability is detrimental to policy reform. (3) The political will and popular consensus for stabilization policies are enhanced during a severe economic crisis. (4) There is weak evidence that intervention by the IMF, rather than supporting reform programs, can undermine their credibility.
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Bibliographic InfoPaper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 648.
Length: 44 pages
Date of creation: 1993
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Postal: University of California, Giannini Foundation of Agricultural Economics Library, 248 Giannini Hall #3310, Berkeley CA 94720-3310
Other versions of this item:
- Ball, Richard & Rausser, Gordon, 1995. "Governance structures and the durability of economic reforms: Evidence from inflation stabilizations," World Development, Elsevier, vol. 23(6), pages 897-912, June.
- Ball, Richard & Rausser, Gordon C., 1993. "Governance structures and the durability of economic reforms; evidence from inflation stabilizations," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7qt9r513, Department of Agricultural & Resource Economics, UC Berkeley.
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