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

Eduardo Cavallo and Alberto Cavallo

No 4589, Research Department Publications from Inter-American Development Bank, Research Department

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.

Date: 2008-09
New Economics Papers: this item is included in nep-dev and nep-pol
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Are crises good for long-term growth? The role of political institutions (2010)
Working Paper: Are Crises Good for Long-Term Growth?: The Role of Political Institutions (2008)
Working Paper: ¿Son Buenas las Crisis para el Crecimiento a Largo Plazo? El Papel de las Instituciones Políticas (2008)
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