Postconflict Monetary Reconstruction
During civil wars governments typically resort to inflation to raise revenue. A model of this phenomenon is presented, estimated, and applied to the choices and constraints faced during the postconflict period. The results show that far from there being a fiscal peace dividend, postconflict governments tend to face even more pressing needs after than during war. As a result, in the absence of postconflict aid, inflation increases sharply, frustrating a more general monetary recovery. Aid decisively transforms the path of monetary variables in the postconflict period, enabling the economy to regain peacetime characteristics. Postconflict aid thus achieves a monetary "reconstruction" analogous to its more evident role in infrastructure. Copyright The Author 2008. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / <sc>the world bank</sc>. All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.
Year of publication: |
2008
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Authors: | Adam, Christopher ; Collier, Paul ; Davies, Victor A.B. |
Published in: |
World Bank Economic Review. - World Bank Group. - Vol. 22.2008, 1, p. 87-112
|
Publisher: |
World Bank Group |
Saved in:
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