Institutional shocks and economic outcomes: Allende's election, Pinochet's coup and the Santiago stock market

Daniele Girardi and Samuel Bowles ()
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Samuel Bowles: Santa Fe Institute

UMASS Amherst Economics Working Papers from University of Massachusetts Amherst, Department of Economics

Abstract: To study the effect of political and institutional changes on the economy, we look at share prices in the Santiago exchange during the tumultuous political events that characterized Chile in the early 1970s. We use a transparent empirical strategy, deploying previously unused daily data and exploiting two largely unexpected shocks which involved substantial variation in policies and institutions, providing a rare natural experiment. Allende's election and subsequent socialist experiment decreased share values, while the military coup and dictatorship that replaced him boosted them, in both cases by magnitudes unprecedented in the literature.

Keywords: institutional shocks; natural experiment; share prices; Chile; socialism; military coup; elections (search for similar items in EconPapers)
JEL-codes: D02 E02 N2 P00 P16 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-his, nep-lam, nep-mac, nep-pke, nep-pol and nep-soc
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Journal Article: Institution shocks and economic outcomes: Allende's election, Pinochet's coup and the Santiago stock market (2018)
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