Political Booms, Financial Crises

Helios Herrera (), Guillermo Ordonez and Christoph Trebesch

No 20346, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show that political booms, measured by the rise in governments' popularity, predict financial crises above and beyond other better-known early warning indicators, such as credit booms. This predictive power, however, only holds in emerging economies. We show that governments in emerging economies are more concerned about their reputation and tend to ride the short-term popularity benefits of weak credit booms rather than implementing politically costly corrective policies that would help prevent potential crises. We provide evidence of the relevance of this reputation mechanism.

JEL-codes: D82 E44 E51 E58 G01 H12 N10 N20 (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-mac and nep-pol
Note: EFG IFM PE POL
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Citations: View citations in EconPapers (15)

Published as Helios Herrera & Guillermo Ordoñez & Christoph Trebesch, 2020. "Political Booms, Financial Crises," Journal of Political Economy, vol 128(2), pages 507-543.

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Related works:
Journal Article: Political Booms, Financial Crises (2020)
Working Paper: Political Booms, Financial Crises (2014)
Working Paper: Political Booms, Financial Crises (2014)
Working Paper: Political Booms, Financial Crises (2014)
Working Paper: Political Booms, Financial Crises (2013)
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