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From Social Contract to Arab Spring: Macroeconomic Adjustment under Regime Change

Author

Listed:
  • Joao Ricardo Faria

    (University of Texas at El Paso)

  • Peter McAdam

    (University of Surrey)

Abstract

Following the Arab-Spring protests, we examine macroeconomic interactions between a productive firm and a rent-seeking government characterized by a continuous probability of regime shift. The model is able to rationalize the early growth leaps witnessed in many Arab economies (the “Social Contract”), as well as their subsequent stagnation. Although post-Spring outcomes are judged benevolent, the macroeconomic inheritance is dependent on the earlier transition characteristics. The model thus sheds light on Arab economic evolutions, the shifting preferences and technologies of authorities and the likely success of economic reforms.

Suggested Citation

  • Joao Ricardo Faria & Peter McAdam, 2013. "From Social Contract to Arab Spring: Macroeconomic Adjustment under Regime Change," School of Economics Discussion Papers 0813, School of Economics, University of Surrey.
    • Handle: RePEc:sur:surrec:0813
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    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

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