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The political economy of Maduro’s economic policies

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  • Rodriguez, Francisco

Abstract

This paper provides a political economy explanation for Venezuela's suboptimal macroeconomic policy choices during the Nicolás Maduro administration. Venezuela’s political system, embodied in the 1999 Constitution, dramatically increased the stakes of power, raising both the benefits of being in power and the costs of leaving office. It also significantly increased the frequency with which elections were held, exposing the government to a near-permanent state of electoral exposure. The combination of high stakes of power and high electoral exposure raised the incentives for policymakers to focus on the short-term effects of policies and disregard their long-term consequences. We explain why this mix proved toxic when the economy was hit with a large negative shock that required it to implement adjustments with significant near-term costs.

Suggested Citation

  • Rodriguez, Francisco, 2020. "The political economy of Maduro’s economic policies," MPRA Paper 105121, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:105121
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Venezuela; Nicolás Maduro; Economics; political economy;
    All these keywords.

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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