Political Sustainability of Economic reforms: Dynamics and Analysis of Regional Economic Factors

J. Fidrmuc

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Abstract

This paper analyzes the political economy of the reform process theoretically and empirically.Building on the framework developed by Rodrik [1995], a two-sector model of a transition economy is constructed.This model is then used to study the dynamics of political support for the reforms.The key role is played by the pattern of flows between the state and private sectors and unemployment.It is shown that while the workers in the private sector always support rapid reforms, the workers in the state sector and the unemployed will support rapid reforms only at the outset of the transition.Later, state-sector workers and unemployed will vote for a reduction in the speed of reforms.The relationship between unemployment and support for the reforms is then tested empirically using regional data from the Czech Republic, Hungary, Poland and Slovakia.
Original languageEnglish
Place of PublicationTilburg
PublisherMacroeconomics
Number of pages24
Volume1996-74
Publication statusPublished - 1996

Publication series

NameCentER Discussion Paper
Volume1996-74

Keywords

  • economic reform
  • regional economics
  • Central Europe
  • Eastern Europe

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    Fidrmuc, J. (1996). Political Sustainability of Economic reforms: Dynamics and Analysis of Regional Economic Factors. (CentER Discussion Paper; Vol. 1996-74). Macroeconomics.