Governance structures and the durability of economic reforms; evidence from inflation stabilizations
This 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.
|Date of creation:||01 Dec 1993|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (510) 642-3345
Fax: (510) 643-8911
Web page: http://www.escholarship.org/repec/are_ucb/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ruttan, Vernon W, 1991.
"What Happened to Political Development?,"
Economic Development and Cultural Change,
University of Chicago Press, vol. 39(2), pages 265-92, January.
- Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
- Tabellini, Guido & Alesina, Alberto, 1990.
"A Positive Theory of Fiscal Deficits and Government Debt,"
3612769, Harvard University Department of Economics.
- Alesina, Alberto & Tabellini, Guido, 1990. "A Positive Theory of Fiscal Deficits and Government Debt," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 403-14, July.
- Rudiger Dornbusch & Ferico Sturzenegger & Holger Wolf, 1990. "Extreme Inflation: Dynamics and Stabilization," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 21(2), pages 1-84.
- Blackburn, Keith & Christensen, Michael, 1989. "Monetary Policy and Policy Credibility: Theories and Evidence," Journal of Economic Literature, American Economic Association, vol. 27(1), pages 1-45, March.
- Rogoff, Kenneth, 1990.
"Equilibrium Political Budget Cycles,"
American Economic Review,
American Economic Association, vol. 80(1), pages 21-36, March.
- Alesina, Alberto, 1992. "Political models of macroeconomic policy and fiscal reform," Policy Research Working Paper Series 970, The World Bank.
- Alesina, Alberto & Drazen, Allan, 1991.
"Why Are Stabilizations Delayed?,"
American Economic Review,
American Economic Association, vol. 81(5), pages 1170-88, December.
- Jeffrey D. Sachs, 1985. "External Debt and Macroeconomic Performance in Latin America and East Asia," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 16(2), pages 523-573.
- Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 102(3), pages 651-78, August.
- Sebastian Edwards & Guido Tabellini, 1990.
"Explaining Fiscal Policies and Inflation in Developing Countries,"
NBER Working Papers
3493, National Bureau of Economic Research, Inc.
- Edwards, Sebastian & Tabellini, Guido, 1991. "Explaining fiscal policies and inflation in developing countries," Journal of International Money and Finance, Elsevier, vol. 10(1, Supple), pages S16-S48, March.
- repec:fth:harver:1496 is not listed on IDEAS
- Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-62, May.
- Nelson, Joan M., 1984. "The political economy of stabilization: Commitment, capacity, and public response," World Development, Elsevier, vol. 12(10), pages 983-1006, October.
- Haggard, Stephan, 1985. "The politics of adjustment: lessons from the IMF's Extended Fund Facility," International Organization, Cambridge University Press, vol. 39(03), pages 505-534, June.
- Rodrik, Dani, 1989.
"Promises, Promises: Credible Policy Reform via Signalling,"
Royal Economic Society, vol. 99(397), pages 756-72, September.
- Dani Rodrik, 1988. "Promises, Promises: Credible Policy Reform via Signaling," NBER Working Papers 2600, National Bureau of Economic Research, Inc.
- Dornbusch, Rudiger, 1990.
"Credibility and Stabilization,"
CEPR Discussion Papers
454, C.E.P.R. Discussion Papers.
- Ahamed, Liaquat, 1986. "Stabilization Policies in Developing Countries," World Bank Research Observer, World Bank Group, vol. 1(1), pages 79-110, January.
- Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer.
- Persson, Torsten & Svensson, Lars E O, 1989. "Why a Stubborn Conservative Would Run a Deficit: Policy with Time-Inconsistent Preferences," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 325-45, May.
- Rodrik, Dani, 1990. "How should structural adjustment programs be designed?," World Development, Elsevier, vol. 18(7), pages 933-947, July.
- Alex Cukierman & Sebastian Edwards & Guido Tabellini, 1989.
"Seigniorage and Political Instability,"
NBER Working Papers
3199, National Bureau of Economic Research, Inc.
- Thomas J. Sargent, 1982.
"The Ends of Four Big Inflations,"
in: Inflation: Causes and Effects, pages 41-98
National Bureau of Economic Research, Inc.
- Haggard, Stephan & Webb, Steven B, 1993. "What Do We Know about the Political Economy of Economic Policy Reform?," World Bank Research Observer, World Bank Group, vol. 8(2), pages 143-68, July.
- Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
- Stephan Haggard & Robert Kaufman, 1989. "The Politics of Stabilization and Structural Adjustment," NBER Chapters, in: Developing Country Debt and the World Economy, pages 263-274 National Bureau of Economic Research, Inc.
- Scully, Gerald W, 1988. "The Institutional Framework and Economic Development," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 652-62, June.
When requesting a correction, please mention this item's handle: RePEc:cdl:agrebk:qt7qt9r513. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If references are entirely missing, you can add them using this form.