Who adjusts and when? On the political economy of reforms

Alberto Alesina, Silvia Ardagna and Francesco Trebbi

No 2108, Harvard Institute of Economic Research Working Papers from Harvard - Institute of Economic Research

Abstract: Why do countries delay stabilizations of large and increasing budget deficits and inflation? And what explains the timing of reforms? We use the war of attrition model as a guidance for our empirical study on a vast sample of countries. We find that stabilizations are more likely to occur when time of crisis occur, at the beginning of term of office of a new government, in countries with "strong" governments, (i. e. presidential systems and unified governments with a large majority of the party in office), and when the executive faces less constraints. The role of external inducements like IMF programs has at best a weak effect, but problem of reverse causality are possible.

Date: 2006
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Related works:
Journal Article: Who Adjusts and When?The Political Economy of Reforms (2006)
Working Paper: Who Adjusts and When? On the Political Economy of Reforms (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:harver:2108

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