When Are Stabilizations Delayed? Alesina-Drazen Revisited

Cesar Martinelli () and Raul Escorza ()

No 408, Working Papers from Centro de Investigacion Economica, ITAM

Abstract: 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.

Keywords: Stabilization delay; economic reforms; war of attrition (search for similar items in EconPapers)
JEL-codes: D72 E60 (search for similar items in EconPapers)
Date: Written 2004-06
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Downloads: (external link)
http://ftp.itam.mx/pub/academico/inves/martinelli/04-08.pdf First version, 2004 (application/pdf)

Related works:
Working Paper: When Are Stabilizations Delayed? Alesina-Drazen Revisited (2005)
Journal Article: When are stabilizations delayed? Alesina-Drazen revisited (2007)
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