Why is Stabilization Sometimes Delayed?

Abstract

Existing work on the politics of stabilization has failed to find compelling evidence of a regime-type effect. This article reformulates and reevaluates the regime-type hypothesis. It is argued that regime type does not have an independent impact on the timing of stabilization. Instead, regime type influences the extent to which societal opposition and distributive conflict will delay stabilization. Societal opposition and distributive conflict are likely to delay stabilization in democratic regimes, because governments must worry about maintaining power. Such societal dynamics are less likely to delay stabilization in authoritarian regimes. Using a sample of 92 high-inflation episodes, precisely these regime-specific dynamics surrounding the politics of stabilization were found. Governments in democratic regimes want to stabilize rapidly but often cannot overcome societal opposition and distributive conflict to do so. Authoritarian regimes are substantially less constrained by societal opposition and distributive conflict but have less incentive to stabilize rapidly.

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