Herrera, Helios. <br/><br/>
Political Booms, Financial Crises / 
Helios Herrera, Guillermo Ordoņez, Christoph Trebesch. 
 - Cambridge, Mass.  National Bureau of Economic Research  2014. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w20346 .
 - Working Paper Series (National Bureau of Economic Research)  no. w20346. .
<br/><br/> July 2014. 
<br/><br/> We show that political booms, measured by the rise in governments' popularity, predict financial crises above and beyond other better-known early warning indicators, such as credit booms. This predictive power, however, only holds in emerging economies. We show that governments in emerging economies are more concerned about their reputation and tend to ride the short-term popularity benefits of weak credit booms rather than implementing politically costly corrective policies that would help prevent potential crises. We provide evidence of the relevance of this reputation mechanism. 
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