Elections, special interests, and the fiscal costs of financial crisis

"Keefer proposes a new approach to explain why the costs of crisis are greater in some countries than in others. He begins with the premise that many crises result from the willingness of politicians to cater to special interests at the expense of broad social interests. A parsimonious model pr...

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Bibliographic Details
Main Author: Keefer, Philip
Corporate Author: World Bank
Format: eBook
Language:English
Published: [Washington, D.C] World Bank 2004
Series:Policy research working paper
Subjects:
Online Access:
Collection: World Bank E-Library Archive - Collection details see MPG.ReNa
Description
Summary:"Keefer proposes a new approach to explain why the costs of crisis are greater in some countries than in others. He begins with the premise that many crises result from the willingness of politicians to cater to special interests at the expense of broad social interests. A parsimonious model predicts that the less costly it is for average citizens to expel politicians, the more veto players there are; the less important are exogenous shocks, and the more difficult it is for politicians and special interests to forge credible agreements, the lower the costs of crisis are. Though these predictions differ from those in the literature, empirical evidence presented shows that they explain the fiscal costs of financial crisis, even after controlling for the financial sector policies believed to contribute most to the efficient prevention and resolution of financial crisis. This paper--a product of the Growth and Investment Team, Development Research Group--is part of a larger effort in the group to understand the political economy of good policy"--World Bank web site
Item Description:Includes bibliographical references. - Title from PDF file as viewed on 10/22/2004