Political Stabilization Cycles in High Inflation Economies

Political Stabilization Cycles in High Inflation Economies

High inflation economies often do not exhibit smooth inflationary processes, but rather stop-go cycles. This paper relates these stop-go episodes of inflation to a political cycle. The government can try to repress inflation until after the elections in order to increase the chances of being reelected. It is modeled as a two-period game of incomplete information where voters try to pick the most competent government, and inflation can be lowered by the government in the short run through foreign debt accumulation. Several stabilization episodes in Latin America, such as the Primavera Plan in Argentina and the Cruzado and Real Plans in Brazil, are used to illustrate the model.

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Bibliographic Details
Main Author: Inter-American Development Bank
Other Authors: Ernesto H. Stein
Format: Working Papers biblioteca
Language:English
Published: Inter-American Development Bank
Subjects:Integration and Trade, Elections, Financial Crisis and Structural Adjustement, D72 - Political Processes: Rent-Seeking Lobbying Elections Legislatures and Voting Behavior, E31 - Price Level • Inflation • Deflation, high inflation;WP-309;political economy,
Online Access:http://dx.doi.org/10.18235/0011614
https://publications.iadb.org/en/political-stabilization-cycles-high-inflation-economies
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spelling dig-bid-node-120122024-05-30T20:30:06ZPolitical Stabilization Cycles in High Inflation Economies 1995-08-01T00:00:00+0000 http://dx.doi.org/10.18235/0011614 https://publications.iadb.org/en/political-stabilization-cycles-high-inflation-economies Inter-American Development Bank Integration and Trade Elections Financial Crisis and Structural Adjustement D72 - Political Processes: Rent-Seeking Lobbying Elections Legislatures and Voting Behavior E31 - Price Level • Inflation • Deflation high inflation;WP-309;political economy High inflation economies often do not exhibit smooth inflationary processes, but rather stop-go cycles. This paper relates these stop-go episodes of inflation to a political cycle. The government can try to repress inflation until after the elections in order to increase the chances of being reelected. It is modeled as a two-period game of incomplete information where voters try to pick the most competent government, and inflation can be lowered by the government in the short run through foreign debt accumulation. Several stabilization episodes in Latin America, such as the Primavera Plan in Argentina and the Cruzado and Real Plans in Brazil, are used to illustrate the model. Inter-American Development Bank Ernesto H. Stein Jorge M. Streb Working Papers application/pdf IDB Publications Brazil Argentina Latin America en
institution BID
collection DSpace
country Estados Unidos
countrycode US
component Bibliográfico
access En linea
databasecode dig-bid
tag biblioteca
region America del Norte
libraryname Biblioteca Felipe Herrera del BID
language English
topic Integration and Trade
Elections
Financial Crisis and Structural Adjustement
D72 - Political Processes: Rent-Seeking Lobbying Elections Legislatures and Voting Behavior
E31 - Price Level • Inflation • Deflation
high inflation;WP-309;political economy
Integration and Trade
Elections
Financial Crisis and Structural Adjustement
D72 - Political Processes: Rent-Seeking Lobbying Elections Legislatures and Voting Behavior
E31 - Price Level • Inflation • Deflation
high inflation;WP-309;political economy
spellingShingle Integration and Trade
Elections
Financial Crisis and Structural Adjustement
D72 - Political Processes: Rent-Seeking Lobbying Elections Legislatures and Voting Behavior
E31 - Price Level • Inflation • Deflation
high inflation;WP-309;political economy
Integration and Trade
Elections
Financial Crisis and Structural Adjustement
D72 - Political Processes: Rent-Seeking Lobbying Elections Legislatures and Voting Behavior
E31 - Price Level • Inflation • Deflation
high inflation;WP-309;political economy
Inter-American Development Bank
Political Stabilization Cycles in High Inflation Economies
description High inflation economies often do not exhibit smooth inflationary processes, but rather stop-go cycles. This paper relates these stop-go episodes of inflation to a political cycle. The government can try to repress inflation until after the elections in order to increase the chances of being reelected. It is modeled as a two-period game of incomplete information where voters try to pick the most competent government, and inflation can be lowered by the government in the short run through foreign debt accumulation. Several stabilization episodes in Latin America, such as the Primavera Plan in Argentina and the Cruzado and Real Plans in Brazil, are used to illustrate the model.
author2 Ernesto H. Stein
author_facet Ernesto H. Stein
Inter-American Development Bank
format Working Papers
topic_facet Integration and Trade
Elections
Financial Crisis and Structural Adjustement
D72 - Political Processes: Rent-Seeking Lobbying Elections Legislatures and Voting Behavior
E31 - Price Level • Inflation • Deflation
high inflation;WP-309;political economy
author Inter-American Development Bank
author_sort Inter-American Development Bank
title Political Stabilization Cycles in High Inflation Economies
title_short Political Stabilization Cycles in High Inflation Economies
title_full Political Stabilization Cycles in High Inflation Economies
title_fullStr Political Stabilization Cycles in High Inflation Economies
title_full_unstemmed Political Stabilization Cycles in High Inflation Economies
title_sort political stabilization cycles in high inflation economies
publisher Inter-American Development Bank
url http://dx.doi.org/10.18235/0011614
https://publications.iadb.org/en/political-stabilization-cycles-high-inflation-economies
work_keys_str_mv AT interamericandevelopmentbank politicalstabilizationcyclesinhighinflationeconomies
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