Difference between revisions of "Alesina Drazen (1991) - Why Are Stabilizations Delayed"
imported>Ed (New page: ==Reference(s)== Alesina, A. and A. Drazen (1991), Why are Stabilizations Delayed?, American Economic Review 81, 1170-1188. [http://www.edegan.com/pdfs/Alesina%20Drazen%20(1991)%20-%20Why%...) |
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Alesina, A. and A. Drazen (1991), Why are Stabilizations Delayed?, American Economic Review 81, 1170-1188. [http://www.edegan.com/pdfs/Alesina%20Drazen%20(1991)%20-%20Why%20are%20Stabilizations%20Delayed.pdf pdf] | Alesina, A. and A. Drazen (1991), Why are Stabilizations Delayed?, American Economic Review 81, 1170-1188. [http://www.edegan.com/pdfs/Alesina%20Drazen%20(1991)%20-%20Why%20are%20Stabilizations%20Delayed.pdf pdf] | ||
Revision as of 18:55, 18 May 2010
- This page is referenced in BPP Field Exam Papers
Reference(s)
Alesina, A. and A. Drazen (1991), Why are Stabilizations Delayed?, American Economic Review 81, 1170-1188. pdf
Abstract
When a stabilization has significant distributional implications (e.g., tax increases to eliminate a large budget deficit), socioeconomic groups may attempt to shift the burden of stabilization onto other groups. The process leading to stabilization becomes a "war of attrition," each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden. We solve for the expected time of stabilization in a model of "rational" delay and relate it to several political and economic variables. We motivate this approach and its results by comparison to historical and current episodes.
