TY  - JOUR
AU  - Drazen,Allan
AU  - Grilli,Vittorio
TI  - The Benefits of Crises for Economic Reforms
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3527
PY  - 1990
Y2  - December 1990
UR  - http://www.nber.org/papers/w3527
L1  - http://www.nber.org/papers/w3527.pdf
N1  - Author contact info:
Allan Drazen
Department of Economics
University of Maryland
College Park, MD 20742
Tel: 301/405-3477
Fax: 301/405-7835
E-Mail: drazen@econ.umd.edu
AB  - 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.
ER  -