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The Political Economy of Infaliton and Stabilization in Developing Countries

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  • Sebastian Edwards

Abstract

This paper deals with political aspects of inflation and stabilization in developing countries. it is argued that by ignoring political considerations. traditional models failed to fully understand the dynamics of inflation. Several newer models are discussed. including models based on strategic government behavior and war of attrition models. Empirical results obtained with developing countries data are discussed in detail. Data on Chile are used to test several versions of political business cycle models. It is found that this perspective helps explain the evolution of inflation through time in that country. Finally. data on a large cross section of countries are used to investigate the political-economy circumstances surrounding major devaluation crises.

Suggested Citation

  • Sebastian Edwards, 1993. "The Political Economy of Infaliton and Stabilization in Developing Countries," NBER Working Papers 4319, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4319
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    Cited by:

    1. Stein, Ernesto H. & Streb, Jorge M., 2004. "Elections and the timing of devaluations," Journal of International Economics, Elsevier, vol. 63(1), pages 119-145, May.
    2. Santiago Pérez Vincent, 2013. "Polarización política, rigideces presupuestarias e inflación," Ensayos de Política Económica, Departamento de Investigación Francisco Valsecchi, Facultad de Ciencias Económicas, Pontificia Universidad Católica Argentina., vol. 2(1), pages 99-144, Octubre.
    3. Osman Suliman & Ghirmay Ghebreysus, 2001. "Determinants of Privatisation in Selected Sub-Saharan African Countries: Is Privatisation Politically Induced?," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 26(2), pages 33-48, December.
    4. Fernando Blumenschein, 1995. "The Positive Economics of Inflation in Brazil," Development and Change, International Institute of Social Studies, vol. 26(4), pages 651-686, October.
    5. Jorge Saba Arbache, 2004. "Do Structural Reforms always Succeed?: Lessons from Brazil," WIDER Working Paper Series RP2004-58, World Institute for Development Economic Research (UNU-WIDER).
    6. Stein, Ernesto H. & Streb, Jorge M., 2004. "Elections and the timing of devaluations," Journal of International Economics, Elsevier, vol. 63(1), pages 119-145, May.
    7. Ralph Setzer, 2005. "The Political Economy of Fixed Exchange Rates: A Survival Analysis," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 265/2005, Department of Economics, University of Hohenheim, Germany.
    8. Berlemann, Michael & Markwardt, Gunther, 2003. "Partisan cycles and pre-electoral uncertainty," Dresden Discussion Paper Series in Economics 01/03, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    9. Ernesto H. Stein & Jorge M. Streb, 1999. "Las elecciones y el momento de las devaluaciones," Research Department Publications 4165, Inter-American Development Bank, Research Department.
    10. Chiara Dalle Nogare, 2000. "I governi di coalizione sono tutti "fiscally irresponsible"? Un'indagine empirica con l'utilizzo della cluster analysis," Politica economica, Società editrice il Mulino, issue 1, pages 93-130.

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    JEL classification:

    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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