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Title:Are crises good for long-term growth? The role of political institutions PDF Logo
Authors:Cavallo, Alberto F.
Cavallo, Eduardo A.
Issue Date:2008
Series/Report no.:Working paper // Inter-American Development Bank, Research Department 643
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.
Subjects:financial crises
democracy
political institutions
economic growth
JEL:O40
O43
F43
Document Type:Working Paper
Appears in Collections:Research Department Working Papers, Inter-American Development Bank

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