Political Booms, Financial Crises

Guillermo Ordonez, Christoph Trebesch and Helios Herrera ()

No 224, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: Credit booms seem to be among the main predictors of financial crises. We find that, in emerging economies, political booms measured by increases in incumbents' popularity are important predictors too, not only of financial crises but of economic crises more generally. We propose a model in which governments concerned about their reputation and popularity ride the benefits of credit booms and delay corrective actions to prevent crises. We discuss the policy implication of the model and the consistency of its testable implications with data.

Date: 2013
New Economics Papers: this item is included in nep-pol
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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 (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed013:224

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