Document details

The political economy of failed stabilization

Author(s): Veiga, Francisco José cv logo 1

Date: 2003

Persistent ID: http://hdl.handle.net/1822/1346

Origin: RepositóriUM - Universidade do Minho

Subject(s): Inflation stabilization; Failure; Political economy


Description
This paper is an empirical analysis of the likelihood of failure of inflation stabilization programs. Logit models are estimated on a dataset of 39 programs implemented in 10 countries since the late 1950s, in order to determine which economic and political variables affect the probability of failure of stabilizations. Besides the well-known effects of real exchange rate appreciation, decreasing foreign reserves, budget deficits and slower GDP growth, I find that political instability, party fractionalization, less pluralism or democracy (greater autocracy), longer time in office and leftist incumbents also increase the probability of failure of inflation stabilization plans.
Document Type Research paper
Language English
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