Political Booms, Financial Crises
Copyright policy )Political Booms, Financial Crises
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.
- University of Warwick United Kingdom
- University of Ottawa (Université dOttawa) Canada
- National Bureau of Economic Research United States
- University of Ottawa Canada
- Ludwig-Maximilians-Universität München
330, Welt, Political Popularity, N20, Kredit, Credit Booms; Reputation; Financial Crises; Political Popularity; Emerging Markets, Financial Crises, E58, E51, Reputation, N10, financial crises, emerging markets, ddc:330, H12, Finanzkrise, reputation, Regierung, political popularity, Schwellenländer, Frühwarnsystem, Neue politische Ökonomie, D82, Credit Booms, E44, Spekulationsblase, Credit Booms, Reputation, Financial Crises, Political Popularity, Emerging Markets, G01, credit booms, Emerging Markets, credit booms, reputation, financial crises, political popularity, emerging markets, jel: jel:D81, jel: jel:D82, jel: jel:E44, jel: jel:G01, jel: jel:N20, jel: jel:E51, jel: jel:E58, jel: jel:H12, jel: jel:N10
330, Welt, Political Popularity, N20, Kredit, Credit Booms; Reputation; Financial Crises; Political Popularity; Emerging Markets, Financial Crises, E58, E51, Reputation, N10, financial crises, emerging markets, ddc:330, H12, Finanzkrise, reputation, Regierung, political popularity, Schwellenländer, Frühwarnsystem, Neue politische Ökonomie, D82, Credit Booms, E44, Spekulationsblase, Credit Booms, Reputation, Financial Crises, Political Popularity, Emerging Markets, G01, credit booms, Emerging Markets, credit booms, reputation, financial crises, political popularity, emerging markets, jel: jel:D81, jel: jel:D82, jel: jel:E44, jel: jel:G01, jel: jel:N20, jel: jel:E51, jel: jel:E58, jel: jel:H12, jel: jel:N10
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