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When Are Stabilizations Delayed? Alesina-Drazen Revisited

  • Cesar Martinelli

    ()

    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

  • Raul Escorza

    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

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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File URL: http://ftp.itam.mx/pub/academico/inves/martinelli/04-08.pdf
File Function: First version, 2004
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Paper provided by Centro de Investigacion Economica, ITAM in its series Working Papers with number 0408.

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Length: 28 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:cie:wpaper:0408
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