Are Crises Good for Long-Term Growth?: The Role of Political Institutions

Eduardo Cavallo and Alberto Cavallo

No 1488, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper provides empirical evidence for the importance of institutions in determining the outcome of crises on long-term growth. Once unobserved country-specific effects and other sources of endogeneity are accounted for, political institutions affect growth through their interaction with crises. The results suggest that only countries with strong democracies, high levels of political competition and external constraints on government can potentially benefit from crises and use them as opportunities to enhance long-term output per capita and productivity growth.

Keywords: WP-643 (search for similar items in EconPapers)
JEL-codes: F43 O40 O43 (search for similar items in EconPapers)
Date: 2008-09
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Are crises good for long-term growth? The role of political institutions (2010)
Working Paper: Are Crises Good for Long-Term Growth? The Role of Political Institutions (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:1488

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