 Conflict inflation and delayed stabilizationElena Seghezza () and Pierluigi Morelli Journal of Macroeconomics, 2014, vol. 39, issue PA, 171-184 Abstract: There are numerous political economy approaches to the question of delayed stabilizations. However, all these approaches regard inflation as the unintentional result of the behavior of interest groups. In this paper we take the opposite view, namely, that when there is polarization of financial wealth, inflation is used as a tax to transfer the burden of stabilization onto some interest groups. In countries characterized by financial polarization, stabilization can occur only when there is a change in the political and economic equilibrium, and when parties which represent interest groups adverse to inflation support a new government coalition. The estimates of a Probit model support this hypothesis: the stabilizations after World War I and after the Great Inflation of the 1970s in several European countries showed remarkable political regularities. In fact, generally, these stabilizations occurred when there was a reversal of the political-economic equilibrium and government coalitions including rentiers’ representatives took power. Keywords: Delayed stabilization; Political exchange; Rentiers; Inflation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:39:y:2014:i:pa:p:171-184 DOI: 10.1016/j.jmacro.2013.10.002 Access Statistics for this article Journal of Macroeconomics is currently edited by Douglas McMillin and Theodore Palivos More articles in Journal of Macroeconomics from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.