The Politics of Economic Crisis in Latin America

Abstract

Researchers widely recognize that economic crises have important political consequences, yet there is little systematic research on the political factors that make nations more or less susceptible to economic crisis. Scholars have long debated the economic consequences of party systems, executive powers, and societal interest groups, but their relationships to crisis proclivity are poorly understood. We assess the political correlates of economic crisis using a cross-sectional time-series analysis of 17 Latin American countries over nearly three decades. Crises are measured along two dimensions-depth and duration-and disaggregated into three types: inflationary, GDP, and fiscal crises. Statistical results suggest that political institutions have a modest, and often unexpected, correlation with crises. More important than institutional attributes are social organization and the nature of partysociety linkages, particularly the existence of a densely-organized trade union movement and/or a powerful leftist party. Strong unions and powerful parties of the left are associated with more severe economic crises, though there is some evidence that the combination of left-labor strength can alleviate inflationary crises. The results demonstrate the need to disaggregate the concept of economic crisis and incorporate the societal dimension when studying the political economy of crisis and reform.The global financial crisis is only the latest in a long line of economic crises that have wreaked havoc on political and economic institutions in the developing world over recent decades. These crises have been instrumental to the downfall of St Comp Int Dev (2010) 45:383-409

The Political Economy of Policy Volatility in Latin America

“…Third, I controlled for a variety of alternative variables: trade, capital openness, foreign direct investment, the ideology of the government, the age of democracy, and the time since elections. Trade was negatively signed and statistically significant, while left governments were positively related to policy volatility and statistically significant (see also Wibbels and Roberts 2010;Doyle 2012). The core results remained unchanged.…”

Factors of subjective household economic well-being in transition countries

“…Numerous researchers (see Rodrik et al, 2004;Wibbels and Roberts, 2010) argue that formal institutions are essential for increasing economic well-being and overcoming economic hardship. For example, a generous welfare state regime secures a decent standard of living to all members of society, irrespective of their individual characteristics, reduces social tensions and promotes subjective well-being (Haller and Hadler, 2006).…”

When all is said and done: updating “Elections, special interests, and financial crisis”

“…Their data is part of an irregular, but ongoing, compilation of information on financial crises that has largely been done by staff at the International Monetary Fund (IMF) and the World Bank over almost two decades (Caprio et al, 2005; Caprio and Klingebiel, 1996, 1997, 2002; Honohan and Klingebiel, 2000, 2003; Laeven and Valencia, 2008, 2010, 2012; Lindgren et al, 1996). Researchers studying financial crises and related policy issues have relied heavily upon the related data sets (a brief sample includes Alt et al, 2014; Bush et al, 2014; Gandrud, 2013; Ha and Kang, 2015; Jordana and Rosas, 2014; Keefer, 2007; Kleibl, 2013; Montinola, 2003; Pepinsky, 2012; Rosas, 2006, 2009a; Wibbels and Roberts, 2010). In fact, almost all recent cross-national research on some aspect of financial crises have relied on either the IMF/World Bank data set or another data set by Reinhart and Rogoff (2010), which is itself heavily based on prior versions of the IMF/World Bank data.…”