[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cdl/agrebk/qt0t30p88v.html
   My bibliography  Save this paper

Putty-clay politics in transition economies

Author

Listed:
  • Lyons, Robert F.
  • Rausser, Gordon C.
  • Simon, Leo K.
Abstract
We build a bargaining-theoretic model of an important dilemma inherent in any major political economic transition process. While swiftly removing the old order is a necessary condition for a successful transition, it also leads to widespread social disruption that may threaten the viability of the reform process. This issue lies at the heart of much of the "big-bang/gradualism" debate in the literature. We argue that this dichotomy is overly simplistic. In particular, the debate, as it has been framed, has failed to capture the significance of interest group competition. Interest group competition matters precisely because the political environment during a transition is fluid and malleable and is thus open to manipulation by interests seeking to mold post-transition governance structures to best serve themselves. As different economic and political structures will give rise to different incentives within these interest groups, one might expect that transition strategies will differ across societies. We show this is the case with two interesting examples. First, we consider how transition strategies differ in open and closed economies. We are able to derive a number of strong results, the most striking of which identifies conditions under which closed economies outperform open economies in terms of social welfare. Our second set of experiments examines Krueger's (1993) "vicious and virtuous circles" theory of policy reform. We identify conditions under which societies with political systems that reward rent-seeking behavior enjoy higher social welfare than societies with political systems that reward productive behavior.

Suggested Citation

  • Lyons, Robert F. & Rausser, Gordon C. & Simon, Leo K., 1996. "Putty-clay politics in transition economies," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0t30p88v, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt0t30p88v
    as

    Download full text from publisher

    File URL: https://www.escholarship.org/uc/item/0t30p88v.pdf;origin=repeccitec
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gordon C. Rausser & William E. Foster, 1990. "Political Preference Functions and Public Policy Reform," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 641-652.
    2. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    3. Dewatripont, Mathias & Roland, Gerard, 1995. "The Design of Reform Packages under Uncertainty," American Economic Review, American Economic Association, vol. 85(5), pages 1207-1223, December.
    4. Rausser, Gordon C & Freebairn, John W, 1974. "Estimation of Policy Preference Functions: An Application to U.S. Beef Import Quotas," The Review of Economics and Statistics, MIT Press, vol. 56(4), pages 437-449, November.
    5. Woo Wing Thye, 1994. "The Art of Reforming Centrally Planned Economies: Comparing China, Poland, and Russia," Journal of Comparative Economics, Elsevier, vol. 18(3), pages 276-308, June.
    6. Gerard Roland, 1994. "The role of political constraints in transition strategies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(1), pages 27-41, March.
    7. von Cramon-Taubadel, Stephan, 1992. "A critical assessment of the political preference function approach in agricultural economics," Agricultural Economics, Blackwell, vol. 7(3-4), pages 371-394, October.
    8. Krueger, Anne O, 1993. "Virtuous and Vicious Circles in Economic Development," American Economic Review, American Economic Association, vol. 83(2), pages 351-355, May.
    9. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    10. Gordon C. Rausser & Leo K. Simon, 1992. "Political Economy of Alliances: Structure and Performance, The," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 92-gatt10, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    11. Lyons, R. F. & Rausser, Gordon C. & Simon, L. K., 1992. "Disruption and Continuity in Bulgaria's Agrarian Reform," Staff General Research Papers Archive 728, Iowa State University, Department of Economics.
    12. Coricelli, Fabrizio & Milesi-Ferretti, Gian Maria, 1993. "On the credibility of 'big bang' programs: A note on wage claims and soft budget constraints in economies in transition," European Economic Review, Elsevier, vol. 37(2-3), pages 387-395, April.
    13. Rausser, Gordon C. & Simon, Leo K. & van 't Veld, Klaas T., 1994. "Political-economic processes and collective decision making," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2s43m3nc, Department of Agricultural & Resource Economics, UC Berkeley.
    14. Zusman, Pinhas, 1976. "The Incorporation and Measurement of Social Power in Economic Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 447-462, June.
    15. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1992. "The Transition to a Market Economy: Pitfalls of Partial Reform," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(3), pages 889-906.
    16. Dewatripont, M & Roland, G, 1992. "The Virtues of Gradualism and Legitimacy in the Transition to a Market Economy," Economic Journal, Royal Economic Society, vol. 102(411), pages 291-300, March.
    17. Newbery, David M., 1993. "Transformation in mature versus emerging economies: Why has Hungary been less successful than China?," China Economic Review, Elsevier, vol. 4(2), pages 89-116.
    18. Sachs, J.D. & Woo, W.T., 1994. "Structural Factors in the Economic Reforms of China, Eastern Europe and the Former Soviet Union," Papers 94-01, California Davis - Institute of Governmental Affairs.
    19. Baron, David P & Ferejohn, John, 1987. "Bargaining and Agenda Formation in Legislatures," American Economic Review, American Economic Association, vol. 77(2), pages 303-309, May.
    20. David S. Bullock, 1994. "In Search of Rational Government: What Political Preference Function Studies Measure and Assume," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(3), pages 347-361.
    21. Paul G. Hare, 1991. "Hungary: In Transition to a Market Economy," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 195-201, Fall.
    22. Vicente Galbis, 1994. "Sequencing of Financial Sector Reforms: A Review," IMF Working Papers 1994/101, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lyons, Robert F. & Rausser, Gordon C. & Simon, Leo K., 1996. "Putty-clay politics in transition economies," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0t30p88v, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Rausser, Gordon C. & Simon, Leo K. & van 't Veld, Klaas T., 1994. "Political-economic processes and collective decision making," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt2s43m3nc, Department of Agricultural & Resource Economics, UC Berkeley.
    3. Coggins, Jay S., 1994. "Implementing Agricultural Policy Virtually: The Case of Set-Aside," Staff Papers 200579, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    4. Xie, Yinxi & Xie, Yang, 2017. "Machiavellian experimentation," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 685-711.
    5. Bullock, David S., 2012. "Dangers of Using Political Preference Functions in Political Economy Analysis: Examples from U.S. Ethanol Policy," 2012 First Congress, June 4-5, 2012, Trento, Italy 124118, Italian Association of Agricultural and Applied Economics (AIEAA).
    6. Justin Yifu Lin & Fang Cai & Zhou Li, 1994. "China's economic reforms : pointers for other economies in transition?," Policy Research Working Paper Series 1310, The World Bank.
    7. Fertő, Imre, 1998. "Az agrárpolitika politikai gazdaságtana I. A kormányzati politikák modellezése a mezőgazdaságban [The political economy of agrarian politics. Part I. Modeling of governmental policies in agricultur," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 223-246.
    8. Johnson, Simon & Kouvelis, Panos & Sinha, Vikas, 1997. "On Reform Intensity under Uncertainty," Journal of Comparative Economics, Elsevier, vol. 25(3), pages 297-321, December.
    9. John Marangos, 2005. "A Political Economy Approach to the Neoclassical Gradualist Model of Transition," Journal of Economic Surveys, Wiley Blackwell, vol. 19(2), pages 263-293, April.
    10. Johnson, R.W.M., 1995. "Modelling Government Processes and Policies in Agriculture: A Review," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 63(03), pages 1-11, December.
    11. Campos, Nauro F. & Horváth, Roman, 2006. "Reform Redux: Measurement, Determinants and Reversals," IZA Discussion Papers 2093, Institute of Labor Economics (IZA).
    12. Klaus Mittenzwei & David S. Bullock & Klaus Salhofer, 2012. "Towards a theory of policy timing," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(4), pages 583-596, October.
    13. Zhiyong Liu & Yue Qiao, 2012. "Abuse of Market Dominance Under China’s 2007 Anti-monopoly Law: A Preliminary Assessment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 41(1), pages 77-107, August.
    14. Che, Jiahua & Facchini, Giovanni, 2004. "Dual Track Liberalization: With and Without Losers," Working Papers 04-0100, University of Illinois at Urbana-Champaign, College of Business.
    15. Gerard Roland, 1994. "The role of political constraints in transition strategies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 2(1), pages 27-41, March.
    16. Ichiro Iwasaki & Taku Suzuki, 2016. "Radicalism Versus Gradualism: An Analytical Survey Of The Transition Strategy Debate," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 807-834, September.
    17. Shen, Jim H. & Liu, Xiao Jie & Zhang, Jun, 2019. "Toward a unified theory of economic reform," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 318-333.
    18. Marchant, Mary A. & Neff, Steven A. & Xiao, Mei, 1997. "Political Economy of United States and European Union Dairy Policy Choice," 1997 Occasional Paper Series No. 7 198045, International Association of Agricultural Economists.
    19. Digdowiseiso, Kumba, 2010. "The transition of China and Ussr: A political economy perspective," MPRA Paper 22561, University Library of Munich, Germany.
    20. Sweder J. G. van Wijnbergen & Tim Willems, 2016. "Learning Dynamics and Support for Economic Reforms: Why Good News Can Be Bad," The World Bank Economic Review, World Bank, vol. 30(1), pages 1-23.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:agrebk:qt0t30p88v. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lisa Schiff (email available below). General contact details of provider: https://edirc.repec.org/data/dabrkus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.