Paper Comment: "The Economics of Political Transitions: Implications for the Arab Spring"

ABSTRACT: "Over the past two years, ongoing political transitions in many Arab countries have led to social unrest and an economic downturn. This paper examines comparable historical episodes of political instability to derive implications for the near- and medium-term economic outlook in the Arab countries in transition. In general, past episodes of political instability were characterized by a sharp deterioration in macroeconomic outcomes and a sluggish recovery over the medium term. Recent economic developments in the Arab countries in transition seem to be unfolding along similar lines, although the weak external environment and large fiscal vulnerabilities could result in a prolonged slump." (by: Khandelwal, Padamja ; Roitman, Agustin / IMF Working Paper No. 13/69)

COMMENTS: A very interesting papers that deals with the relationship between political cycles and its economic effects. While the Latin-America's economic consequences of such phenomenon are slightly different, the key issue is that there is a strong relationship with the quality of macroeconomic policies, specially around the deterioration of public finances.

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