9. See Jeffrey D. Sachs, 'External Debt and Macroeconomic Performance in Latin America and East Asia,' Brookings Papers on Economic Activity 1985, 2: 523573; Jeffrey Sachs, 'Social Conflict and Populist Policies in Latin America,' National Bureau of Economic Research Working Paper No. 2897 (March 1989); Stephan Haggard, Pathways from the Periphery: the Politics of Growth n the Newly Industrializing Countries (Ithaca: Cornell University Press, 1990), ch. 9.

10. Several objections can be raised against this expectation. First, a number of critics have noted that such a Philipps curve trade-off may not exist even in the short-run. Second, inflation may tax the poor relatively more heavily than the rich. Inflation is a tax on money balances, and the poor are more likely to hold a greater share of income in the form of cash. The wealthy, by contrast, are better able to shelter income through their access to a diverse range of financial instruments. In the absence of full indexation, inflation also erodes real wages, the main source of income for the poor.

11. The original statement of this perspective is William Nordhaus, 'The Political Business Cycle,' Review of Economic Studies 42: 169-190. For an empirical treatment with reference to the developing countries, Barry Ames, Political Survival: Politicians and Public Policy in Latin America (Berkeley: University of California Press, 1987). The rational expectations literature has made the assumption of myopic voters and a Phillips-curve tradeoff controversial. For a critique along these lines, see Brian Barry, 'Does Democracy Cause Inflation? Political Ideas of Some Economists," in Leon N. Lindberg and Charles S. Maier, The Politics of Inflation and Economic Stagnation (Washington D.C.: The Brookings Institution, 1985). For attempts to defend the expectations-augmented Phillips curve, see Robert E. Lucas, Jr., 'An Equilibrium Model of Business Cy-les," Journal of Political Economy 83, 6 (December 1975), pp. 1113-44; Stanley Fischer, "Long-term Contracts, Rational Expectations, and the Optimal Money Supply Rule,' Journal of Political Economy, 85, 1 (February 1977). 191-206. For a discussion of several models of the political business cycle that attempt to incorporate rational expectations, see Alberto Alesina, "Politics and Businebs Cycles in Industrial Democracies," Economic Policy 9 (April 1989), 63-4 and William Nordhaus, 'Alternative Approaches to the Political Business Cycle," Brookings Papers on Economic Activity 2 (1989) 1-68.

12. For a further analysis of the constraints on new democratic governments, see Stephan Haggard and Robert Kaufman, "Economic Adjustment in New Democracies," in Joan Nelson, ed., Fragile Coalitions: The Politics of Economic Adjustment (New Brunswick: Transaction Books, 1989).

13. For theoretical attempts to model why changes of government are likely to result in macroeconomic instability, see Alberto Alesina and Allan Drazen, 'Why Are Stabilizations Delayed? A Political-Economic Model," unpublished ms., and Alex Cukierman, Sebastian Edwards and Guido Tabellini, ^Seignorage and Political Instability,^ paper presented at the NEER conference on Political Economy, May 1989.

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