Political Stabilization Cycles in High Inflation Economies

Ernesto Stein and Jorge Streb ()

No 233383, Center for International and Development Economics Research (CIDER) Working Papers from University of California-Berkeley, Department of Economics

Abstract: High inflation economies do not always exhibit smooth inflationary processes; sometimes stop-go cycles of inflation are observed. This paper relates these stop-go episodes to a political cycle: Governments can defer inflation until after elections to increase their chances of being reelected. This is modelled as a two-period game of incomplete information where voters try to pick the most competent candidate, and inflation (which is used as a signal of competency) can be lowered by the government in the short run through foreign debt accumulation.

Keywords: Political; Economy (search for similar items in EconPapers)
Pages: 58
Date: 1994-08
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Citations: View citations in EconPapers (14)

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https://ageconsearch.umn.edu/record/233383/files/cal-cider-c094-039.pdf (application/pdf)

Related works:
Journal Article: Political stabilization cycles in high-inflation economies (1998)
Working Paper: Political Stabilization Cycles in High Inflation Economies (1997)
Working Paper: Political Stabilization Cycles in High Inflation Economies (1995)
Working Paper: Political Stabilization Cycles in High Inflation Economies (1994)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucbewp:233383

DOI: 10.22004/ag.econ.233383

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