NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Benefits of Crises for Economic Reforms

Allan Drazen, Vittorio Grilli

NBER Working Paper No. 3527
Issued in December 1990
NBER Program(s):   ITI   IFM

This paper presents a model in which economic crises have positive effects on welfare. Periods of very high inflation create the incentive for the resolution of social conflict and thus facilitate the introduction of economic reforms and the achievement of higher levels of welfare. Policies to reduce the cost of inflation, such as indexation, raise inflation and delay the adoption of reforms, but have no effect on expected social welfare.

download in pdf format
   (681 K)

email paper

This paper is available as PDF (681 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w3527

Published: American Economic Review, vol.83, no.3, June1993. citation courtesy of

Users who downloaded this paper also downloaded these:
Alesina and Drazen w3053 Why are Stabilizations Delayed?
Alesina, Ardagna, and Trebbi w12049 Who Adjusts and When? On the Political Economy of Reforms
Taylor w14631 The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong
Alesina and Perotti w4637 The Political Economy of Budget Deficits
Rodrik w3947 The Rush to Free Trade in the Developing World: Why So Late? Why Now? Will it Last?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us