Political Booms, Financial Crises / Helios Herrera, Guillermo Ordoñez, Christoph Trebesch.

Format:

Book

Author/Creator:

Herrera, Helios.

Contributor:

National Bureau of Economic Research.

Ordoñez, Guillermo.

Trebesch, Christoph.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20346.

NBER working paper series no. w20346

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

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.

Notes:

Print version record

July 2014.