Gunes Gokmen
Associate senior lecturer
Policies in Hard Times: Assessing the Impact of Financial Crises on Structural Reforms
Author
Summary, in English
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.
Department/s
- Department of Economics
Publishing year
2021-03-10
Language
English
Pages
2529-2552
Publication/Series
Economic Journal
Volume
131
Issue
638
Document type
Journal article
Publisher
Wiley-Blackwell
Topic
- Economics and Business
Keywords
- Financial crises, structural reforms, liberalization, institutional systems, IMF programs, government crises, public opinion
Status
Published
ISBN/ISSN/Other
- ISSN: 1468-0297