Policies in Hard Times: Assessing the Impact of Financial Crises on Structural Reforms
(2021) In Economic Journal 131(638). p.2529-2552- Abstract
- It is commonly argued that crises open up a window of opportunity to implement policies that otherwise would not have the necessary political backing. The argument goes that the political cost of economic and social reforms declines as crises unravel structural problems that need to be urgently rectified and the public is more willing to bear the pains associated with such reforms. This paper casts doubt on this prevalent view by showing that not only is the crises-reforms nexus unfounded in the data, but rather crises are associated with a reversal of liberalization interventions depending on the institutional environment. In particular, we look at measures of liberalization in international trade, agriculture, network industries, and... (More)
- It is commonly argued that crises open up a window of opportunity to implement policies that otherwise would not have the necessary political backing. The argument goes that the political cost of economic and social reforms declines as crises unravel structural problems that need to be urgently rectified and the public is more willing to bear the pains associated with such reforms. This paper casts doubt on this prevalent view by showing that not only is the crises-reforms nexus unfounded in the data, but rather crises are associated with a reversal of liberalization interventions depending on the institutional environment. In particular, we look at measures of liberalization in international trade, agriculture, network industries, and financial markets. We find that, in democratic countries, crises occurrences have no significant impact on liberalization measures. On the contrary, after a crisis, autocracies reduce liberalization in multiple economic sectors, which we interpret as the fear of regime change leading non-democratic rulers to please vested economic interests. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/033b4d44-0026-48e8-b859-c6591aead277
- author
- Gokmen, Gunes LU ; Onorato, Massimiliano Gaetano ; Nannicini, Tommaso and Papageorgiou, Chris
- organization
- publishing date
- 2021-03-10
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Financial crises, structural reforms, liberalization, institutional systems, IMF programs, government crises, public opinion
- in
- Economic Journal
- volume
- 131
- issue
- 638
- pages
- 2529 - 2552
- publisher
- Wiley-Blackwell
- external identifiers
-
- scopus:85131878641
- ISSN
- 1468-0297
- DOI
- 10.1093/ej/ueab017
- language
- English
- LU publication?
- yes
- id
- 033b4d44-0026-48e8-b859-c6591aead277
- date added to LUP
- 2021-05-06 09:23:36
- date last changed
- 2023-01-25 04:01:30
@article{033b4d44-0026-48e8-b859-c6591aead277,
abstract = {{It is commonly argued that crises open up a window of opportunity to implement policies that otherwise would not have the necessary political backing. The argument goes that the political cost of economic and social reforms declines as crises unravel structural problems that need to be urgently rectified and the public is more willing to bear the pains associated with such reforms. This paper casts doubt on this prevalent view by showing that not only is the crises-reforms nexus unfounded in the data, but rather crises are associated with a reversal of liberalization interventions depending on the institutional environment. In particular, we look at measures of liberalization in international trade, agriculture, network industries, and financial markets. We find that, in democratic countries, crises occurrences have no significant impact on liberalization measures. On the contrary, after a crisis, autocracies reduce liberalization in multiple economic sectors, which we interpret as the fear of regime change leading non-democratic rulers to please vested economic interests.}},
author = {{Gokmen, Gunes and Onorato, Massimiliano Gaetano and Nannicini, Tommaso and Papageorgiou, Chris}},
issn = {{1468-0297}},
keywords = {{Financial crises, structural reforms, liberalization, institutional systems, IMF programs, government crises, public opinion}},
language = {{eng}},
month = {{03}},
number = {{638}},
pages = {{2529--2552}},
publisher = {{Wiley-Blackwell}},
series = {{Economic Journal}},
title = {{Policies in Hard Times: Assessing the Impact of Financial Crises on Structural Reforms}},
url = {{http://dx.doi.org/10.1093/ej/ueab017}},
doi = {{10.1093/ej/ueab017}},
volume = {{131}},
year = {{2021}},
}