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Political Sustainability of Economic reforms : Dynamics and Analysis of Regional Economic Factors

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  • Fidrmuc, J.

    (Tilburg University, Center For Economic Research)

Abstract

This paper analyzes the political economy of the reform process theoretically and empirically.Building on the framework developed by Rodrik [1995], a two-sector model of a transition economy is constructed.This model is then used to study the dynamics of political support for the reforms.The key role is played by the pattern of flows between the state and private sectors and unemployment.It is shown that while the workers in the private sector always support rapid reforms, the workers in the state sector and the unemployed will support rapid reforms only at the outset of the transition.Later, state-sector workers and unemployed will vote for a reduction in the speed of reforms.The relationship between unemployment and support for the reforms is then tested empirically using regional data from the Czech Republic, Hungary, Poland and Slovakia.

Suggested Citation

  • Fidrmuc, J., 1996. "Political Sustainability of Economic reforms : Dynamics and Analysis of Regional Economic Factors," Discussion Paper 1996-74, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:d1a86da9-8e64-4b65-afba-bddcaaa7984c
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    File URL: https://pure.uvt.nl/ws/portalfiles/portal/525234/74.pdf
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    References listed on IDEAS

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    1. Alberto Alesina & Gerald D. Cohen & Nouriel Roubini, 1991. "Macroeconomic Policy and Elections in OECD Democracies," NBER Working Papers 3830, National Bureau of Economic Research, Inc.
    2. Alberto Alesina & Gerald D. Cohen & Nouriel Roubini, 1992. "Macroeconomic Policy And Elections In Oecd Democracies," Economics and Politics, Wiley Blackwell, vol. 4(1), pages 1-30, March.
    3. Rodrik Dani, 1995. "The Dynamics of Political Suppport for Reform in Economies in Transition," Journal of the Japanese and International Economies, Elsevier, vol. 9(4), pages 403-425, December.
    4. Jeffrey D. Sachs, 1989. "Social Conflict and Populist Policies in Latin America," NBER Working Papers 2897, National Bureau of Economic Research, Inc.
    5. Cohen, Gerald & Alesina, Alberto & Roubini, Nouriel, 1992. "Macroeconomic Policy and Elections in OECD Democracies," Scholarly Articles 4553023, Harvard University Department of Economics.
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    Cited by:

    1. Claudiu-Gabriel Tiganas & Claudiu Peptine, 2012. "Political Business Cycle And Economic Instability - Literature Review," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(4), pages 853-865, December.
    2. Olga Popova, 2010. "Corruption, Voting and Employment Status: Evidence from Russian Parliamentary Elections," CERGE-EI Working Papers wp428, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

    More about this item

    Keywords

    economic reform; regional economics; Central Europe; Eastern Europe;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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