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Article
Political Regimes and the Cost of Disinflation
Journal of Money, Credit and Banking
  • Barbara Caporale, Ohio University - Main Campus
  • Tony Caporale, University of Dayton
Document Type
Article
Publication Date
10-1-2008
Abstract
This study investigates, using data from 1960 to 1998, whether the nature of political regimes can help explain cross-national and intertemporal variations in the cost of disinflationary policies, as measured by the sacrifice ratio. We show that, ceteris paribus, right-wing governments have lower costs of disinflations than left-wing governments. We argue this is due to a superior credibility, resulting from their stronger anti-inflation reputations. In addition (and in marked contrast to previous studies), we find that when we control for political regimes, trade openness, and other standard factors in this literature, central bank independence has no significant effect on the sacrifice ratio.
Inclusive pages
1541–1554
ISBN/ISSN
0022-2879
Comments

Permission documentation is on file.

Publisher
John Wiley & Sons
Peer Reviewed
Yes
Citation Information
Barbara Caporale and Tony Caporale. "Political Regimes and the Cost of Disinflation" Journal of Money, Credit and Banking Vol. 40 Iss. 7 (2008)
Available at: http://works.bepress.com/tony_caporale/43/