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Political Parties, Elections and Inflation in Greece

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  • Alogoskoufis, George
  • Philippopoulos, Apostolis

Abstract

We extend the `rational partisan model' of inflation and unemployment by introducing inflation and unemployment dynamics. We investigate the case of Greece, which has had a polarized political system and a problem of persistently high inflation in the last two decades. High inflation can be attributed to the failure of political parties to precommit to price stability. The greater aversion of `socialists' to unemployment results in an inflation rate which is higher by five percentage points than under the more anti-inflationary `conservatives'. Unemployment seems to be independent of the identity of the party in power, and post-election years do not seem to be characterized by systematic mistakes on the part of wage setters as predicted by recent partisan theories.

Suggested Citation

  • Alogoskoufis, George & Philippopoulos, Apostolis, 1991. "Political Parties, Elections and Inflation in Greece," CEPR Discussion Papers 547, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:547
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    References listed on IDEAS

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    Cited by:

    1. Klaus Wälde & Christina Wood, 2004. "The empirics of trade and growth: where are the policy recommendations?," International Economics and Economic Policy, Springer, pages 275-292.

    More about this item

    Keywords

    Elections; Greece; Political Parties; Unemployment;

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