Why Are Stabilizations Delayed?

Allan Drazen and Alberto Alesina

Scholarly Articles from Harvard University Department of Economics

Abstract: When a stabilization has significant distributional implications (e.g., tax increases to eliminate a large budget deficit), socioeconomic groups may attempt to shift the burden of stabilization onto other groups. The process leading to stabilization becomes a "war of attrition," each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden. We solve for the expected time of stabilization in a model of "rational" delay and relate it to several political and economic variables. We motivate this approach and its results by comparison to historical and current episodes.

Date: 1988
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in American Economic Review

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/4553028/alesina_whystabilizations.pdf (application/pdf)

Related works:
Journal Article: Why Are Stabilizations Delayed? (1991)
Working Paper: Why are Stabilizations Delayed (1991)
Working Paper: Why Are Stabilizations Delayed? (1991)
Working Paper: Why are Stabilizations Delayed? (1989)
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:hrv:faseco:4553028

Access Statistics for this paper

More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().