Are Crises Good for Long-Term Growth?: The Role of Political Institutions

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.

Bibliographic Details

Main Author:	Inter-American Development Bank
Other Authors:	Eduardo A. Cavallo
Format:	Working Papers biblioteca
Language:	English
Published:	Inter-American Development Bank
Subjects:	Financial Crisis and Structural Adjustement, F43 - Economic Growth of Open Economies, O40 - Economic Growth and Aggregate Productivity: General, O43 - Institutions and Growth, WP-643,
Online Access:	http://dx.doi.org/10.18235/0010820 https://publications.iadb.org/en/are-crises-good-long-term-growth-role-political-institutions
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