Razmi, Arslan2024-04-262024-04-022024https://hdl.handle.net/20.500.14394/22344An important body of literature explores the political economy reasons underlying delays in macroeconomic stabilization. This paper develops a framework to analyze conflict between two groups of economic actors, one that has an endowment of internationally tradable goods and another that is endowed with non-tradable goods. The focus is on the exchange rate policy in a developing country set-up where the government employs seigniorage revenue to finance spending pre-stabilization, and faces fiscal and balance of payments problems that necessitate stabilization with a step devaluation. The presence of exchange rate and endowment uncertainty, the role of forward-looking expectations, and the possibility of IMF aid influence the likelihood, timing, and terms of a national consensus on stabilization in interesting ways.UMass Amherst Open Access Policyhttp://creativecommons.org/licenses/by/4.0/Macroeconomic stabilizationseigniorageinflationdevaluationcapital flightIMF programsEconomicsMacroeconomicsWorking Paper