transitional governments may find it politically difficult to
implement measures to maintain macroeconomic stability
and avoid a prolonged growth slump.
Measures that need to be implemented include a growth-
friendly fiscal adjustment to reduce generalized subsidies,
bolster investment, and strengthen targeted social safety nets.
International financing could facilitate a gradual fiscal ad-
justment. Greater exchange rate flexibility could improve the
ability of the economy to withstand and cope with external
shocks, while implementation of institutional and regulatory
reforms could raise potential growth and create greater and
more equal access to economic and employment opportu-
nities. As populations see new governments deliver higher
standards of living, this will also reduce the likelihood of a
recurrence of political instability.
Alesina, A., S. Ozler, N. Roubini, and P. Swagel, 1996, “Political
Instability and Economic Growth,” Journal of Economic
Growth, Vol. 1 (June) pp. 189–211.
Alesina, A., and R. Perotti, 1996, “Political Instability, Income
Distribution, and Investment,” European Economic Review,
Vol. 40 (June) pp. 1203–28.
Credit Suisse Research Institute, 2011, From Spring to Revival:
Regime Change and Economic Transformation, (Zurich,
Freund, C., and M. Jaud, 2013, “Regime Change, Democracy
and Growth,” CEPR Discussion Paper No. 9282 (London:
Center for Economic Policy Research).
Khandelwal, P. and A. Roitman, 2013, “The Economics of Political
Transitions: Implications for the Arab Spring,” IMF Working
Paper 13/69 (Washington: International Monetary Fund).
IMF Working Papers
Working Paper 13/41
Infrastructure and Income Distribution in ASEAN-5:
What are the Links?
Seneviratne, Dulani; Sun, Yan
Working Paper 13/42
Macroeconomic Evaluation of Labor Market Reform
Krebs, Tom; Scheel, Martin
Working Paper 13/43
Structural Transformation and the Volatility of Aggregate
Output in OECD Countries
Lonkeng Ngouana, Constant
Working Paper 13/44
Dealing with Private Debt Distress in the Wake of the
European Financial Crisis: A Review of the Economics
and Legal Toolbox
Liu, Yan; Rosenberg, Christoph
Working Paper 13/45
Asset Price Bubbles: A Selective Survey
Working Paper 13/46
Too Small to Fail? Subnational Spending Pressures in Europe
Eyraud, Luc; Moreno Badia, Marialuz
Working Paper 13/47
Financial Stability in an Evolving Regulatory and Supervisory
Working Paper 13/48
Taxation, Bank Leverage, and Financial Crises
Mooij, Ruud A.; Keen, Michael; Orihara, Masanori
Working Paper 13/49
Fiscal Multipliers in Bulgaria: Low But Still Relevant
Muir, Dirk; Weber, Anke
Working Paper 13/50
e Endogenous Skill Bias of Technical Change and
Inequality in Developing Countries
Working Paper 13/51
Benchmarking Banking Sector Eciency Across Regional
Blocks in Sub-Saharan Africa: What Room for Policy?
Boutin-Dufresne, Francois; Peña, Santiago; Williams, Oral;
Zawisza, Tomasz A.
Working Paper 13/52
Outward Foreign Direct Investment and Domestic
Investment: e Case of Developing Countries
Working Paper 13/53
e Quality of the Recent High-Growth Episode in Sub-
Martinez, Marcelo; Mlachila, Montfort
Working Paper 13/54
Systemic Contingent Claims Analysis—Estimating
Market-Implied Systemic Risk
Jobst, Andreas A.; Gray, Dale
(continued on page 10)