IMF Working Papers

• Pages: 9-11

June 2013

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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.

References

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,

Switzerland).

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?

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Working Paper 13/42

Macroeconomic Evaluation of Labor Market Reform

in Germany

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Structural Transformation and the Volatility of Aggregate

Output in OECD Countries

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Dealing with Private Debt Distress in the Wake of the

European Financial Crisis: A Review of the Economics

and Legal Toolbox

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Asset Price Bubbles: A Selective Survey

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Too Small to Fail? Subnational Spending Pressures in Europe

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Financial Stability in an Evolving Regulatory and Supervisory

Landscape

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Taxation, Bank Leverage, and Financial Crises

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e Endogenous Skill Bias of Technical Change and

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Benchmarking Banking Sector Eciency Across Regional

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Zawisza, Tomasz A.

Working Paper 13/52

Outward Foreign Direct Investment and Domestic

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Working Paper 13/53

e Quality of the Recent High-Growth Episode in Sub-

Saharan Africa

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Systemic Contingent Claims Analysis—Estimating

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