Studies on Issues in Political Economy since the Global Financial Crisis

Kai Jäger

in ifo Beiträge zur Wirtschaftsforschung from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: The dissertation includes four studies broadly connected to the causes and consequences of the Global Financial Crisis of 2007-8 from a political economy perspective. Following the intro-duction, Chapter 2 analyzes the political roots of massive foreign reserves accumulation, which has contributed to the American credit boom before the financial crisis. The study shows that elections tend to explain why democracies have acquired less foreign reserves than authoritarian regimes. Basel III was a regulatory consequence of the Global Financial Crisis, which is scheduled to impose liquidity requirements as a prudential measure for commercial banks. Chapter 3 examines whether these liquidity requirements could have an unintended negative effect on monetary stability. Based on a new dataset of reserve and liquidity requirements, the results show that inflation is more robust to changes in the velocity of money if reserve and liquidity requirements are low. Increases in the velocity of money are associated with higher inflation rates if reserve and liquidity requirements are high. The ability of partisan politics to shape economic policies according to ideological goals has been regularly questioned in an era of globalization and austerity. Chapter 4 suggests that government ideology still has a pronounced impact on economic policy-making based on a sample of OECD and new EU member states. Chapter 5 analyzes why major business leaders in France and Germany have publicly supported the euro in the weeks before a bailout program got enacted by the European Council in July 2011. The study shows that direct corporate interest did not appear to matter. Instead, business leaders appeared to be more likely to join the campaign if they were well-connected in business and political networks. The findings suggest that managers disregarded their short-term economic interest to improve their long-term ties with political decision-makers.

JEL-codes: D72 D85 E41 E50 F31 H10 H50 (search for similar items in EconPapers)
Date: 2017
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