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| Title: | | The political economy of postwar reconstruction in Lebanon  |
| Authors: | | Dibeh, Ghassan |
| Issue Date: | | 2005 |
| Series/Report no.: | | Research Paper, UNU-WIDER, United Nations University (UNU) 2005/44 |
| Abstract: | | This paper studies the postwar economic and political reconstruction in Lebanon. The paper shows that the ‘reconstruction boom’ was short-lived. The economy experienced a growth trap early in the reconstruction period, and entered a cyclical crisis in 1998 which resulted from an ill-designed fiscal-monetary policy mix. The expansionary fiscal policy resulting from the high resource demands – due to economic and political reconstruction and from the needs of addressing horizontal inequality codified in the peace agreement known as the Taef Accords – led to a fiscal crisis of the state. The monetary and central bank policy was finance-biased with emphasis on financial and exchange rate stability and foreign capital inflows. Such a mix led to a real interest rate shock in the postwar period that played a role in the onset of the cyclical downturn. The finance-biased policy led to the rise of a rentier economy leading to deindustrialization during this period. The rise of a growth-impeding political economic structure resulting from the Taef Accords also played a role in intensifying the economic crisis through exerting pressures on public resources and through the engendering of a political crisis that brought to an end the era of postwar reconstruction. – conflict ; civil war ; post-conflict ; institutions ; social contract |
| JEL: | | D74 E52 O23 H56 |
| ISBN: | | 9291907278 |
| Document Type: | | Working Paper |
| Appears in Collections: | | WIDER Research Papers, United Nations University (UNU)
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