NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Who Adjusts and When? On the Political Economy of Reforms

Alberto Alesina, Silvia Ardagna, Francesco Trebbi

NBER Working Paper No. 12049
Issued in February 2006
NBER Program(s):   EFG   PE   POL

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.

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Document Object Identifier (DOI): 10.3386/w12049

Published: Alesina, Alberto, Silvia Ardagna, and Francesco Trebbi. “Who Adjusts and When? On the Political Economy of Stabilizations.” IMF Staff Papers, Mundell-Fleming Lecture, 53: 1-49, 2006 .

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