After the Honeymoon: On the Economics and the Politics of Economic Transformation

Charles Wyplosz

No 734, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper focuses on the obvious: Pareto-improving programmes may fail to improve everyone's lot. Politically, it has often been interpreted as a requirement that a majority should benefit from the change. Events in Central and Eastern Europe suggest otherwise and cast doubt on the relevance of the median-voter theorem. The addition of minority discontents may result in major political difficulties that lead governments to avoid actions that generate strong minority objections. As a result, the technically best-crafted plans may be rejected for political reasons. In addition, reform programmes which are ex ante politically acceptable may well become rejected ex post after they are implemented. One solution is to introduce a heavy dose of egalitarian income distribution, even if it runs against labour supply incentives.

Keywords: Economic Reform; Political Equilibrium (search for similar items in EconPapers)
JEL-codes: E62 E63 E65 (search for similar items in EconPapers)
Date: 1992-11
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=734 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: After the honeymoon: On the economics and the politics of economic transformation (1993)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:734

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=734
orders@cepr.org

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by (repec@cepr.org).