Reform from Within

Aaron Tornell

Working Papers from Harvard - Institute for International Development

Abstract: We present a model of endogenous institutional change that rationalizes reforms that have taken place in the context of economic crisis and drastic political change. Most of these reforms have been initiated by powerholders, even though they have ended worse-off relative to the status quo. The first point we make is that reform is the tool used by some powerful groups to limit the power of their political opponents. The second point is common "access" to economy's resources find it individually rational to overappropriate resources. As a result the economy deteriorates. When the economy reaches a crisis conflict among groups erupts. Reform is the result of this conflict.

Keywords: MACROECONOMICS; GAME THEORY; ECONOMIC GROWTH; PUBLIC FINANCE; TECHNOLOGY (search for similar items in EconPapers)
JEL-codes: C73 D90 E62 O40 (search for similar items in EconPapers)
Pages: 51 pages
Date: 1998
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