Abstract

PERILLA JIMENEZ, Juan Ricardo. AN EMPIRICAL APPROACH TO THE POLITICAL ECONOMY OF FINANCIAL CRISES. Rev.econ.inst. [online]. 2008, vol.10, n.18, pp. 179-211. ISSN 0124-5996.

The paper presents a model of political loss to analyze the interrelationship between the political nature o f economic decisions and their influence on the probability of financial crisis. Two different definitions of crises, currency and balance of payments, are used to verify the explanatory power of political factors on both definitions of crisis. Also, a probit model is used on a sample of 63 countries between 1985 and 2000. The statistical evidence shows that while political factors are robust when they explain currency crises, they are more ambiguous in the explanation of balance of payments crises.

Keywords : financial crises; truncated and censored models.