UNIVERSITY OF MARYLAND. CENTER FOR INSTITUTIONAL REFORM AND THE INFORMAL SECTOR (IRIS)
Sequencing of economic reforms in the presence of political constraints
In recent experiences of economic reform in Eastern Europe and Latin America, comprehensive and swift introduction of reforms seems to have led to larger than necessary adjustment costs.
Marinelli, Cesar; Tommasi, Mariano · 1994
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Abstract
This article examines this phenomenon within a political-economic framework. When political sustainability considerations are taken into account, the optimal course of action may be very different from one that could be inferred from a purely economic perspective. The model used in this article portrays the case of a country in a political deadlock about reform proposals that hurt strongly organized interests. The authors predict that, in such cases, under democratic conditions, only far reaching reforms accompanied by major political realignments have hope of success. (Author abstract, modified)
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