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Economic reforms and political constraints: on the time inconsistency of gradual sequencing

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  • Martinelli, César
  • Tommasi, Mariano

Abstract

This paper presents a model portraying a country in a political deadlock about reform proposals that hurt strongly organized interest groups. We show that, under sorne circumstances (no ability to precommit, veto power by interest groups), only far reaching reforms (even if quite costly) have hope of success. The model intends to explain why in recent years several Latin American countries have gone for radical reform.

Suggested Citation

  • Martinelli, César & Tommasi, Mariano, 1995. "Economic reforms and political constraints: on the time inconsistency of gradual sequencing," UC3M Working papers. Economics 3916, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:3916
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    References listed on IDEAS

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    1. Michael Mussa, 1982. "Government Policy and the Adjustment Process," NBER Chapters, in: Import Competition and Response, pages 73-122, National Bureau of Economic Research, Inc.
    2. Dewatripont, Mathias & Roland, Gerard, 1995. "The Design of Reform Packages under Uncertainty," American Economic Review, American Economic Association, vol. 85(5), pages 1207-1223, December.
    3. Mariano Tommasi & Andrés Velasco, 1996. "Where are we in the political economy of reform?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 1(2), pages 187-238.
    4. Rodrik, Dani, 1989. "Promises, Promises: Credible Policy Reform via Signalling," Economic Journal, Royal Economic Society, vol. 99(397), pages 756-772, September.
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    Cited by:

    1. Romain Duval & Davide Furceri & Jakob Miethe, 2021. "Robust political economy correlates of major product and labor market reforms in advanced economies: Evidence from BAMLE for logit models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 36(1), pages 98-124, January.
    2. Hans J. Czap & Kanybek D. Nur-tegin, 2011. "Big Bang vs. Gradualism – A Productivity Analysis," EuroEconomica, Danubius University of Galati, issue 29, pages 38-56, August.

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