To refer to this page use:
|Abstract:||Countries become more politically polarized and fractionalized following financial crises, reducing the likelihood of major financial reforms precisely when they might have especially large benefits. The evidence from a large sample of countries provides strong support for the hypotheses that following a financial crisis, voters become more ideologically extreme and ruling coalitions become weaker, independently of whether they were initially in power. The evidence that increased polarization and weaker governments reduce the chances of financial reform and that financial crises lead to legislative gridlock and anemic reform is less clear-cut. The US debt overhang resolution is discussed as an illustration.|
|Citation:||Mian, A, Sufi, A, Trebbi, F. (2014). Resolving debt overhang: Political constraints in the aftermath of financial crises. American Economic Journal: Macroeconomics, 6 (2), 1 - 28. doi:10.1257/mac.6.2.1|
|Pages:||1 - 28|
|Type of Material:||Journal Article|
|Journal/Proceeding Title:||American Economic Journal: Macroeconomics|
|Version:||Final published version. Article is made available in OAR by the publisher's permission or policy.|
Items in OAR@Princeton are protected by copyright, with all rights reserved, unless otherwise indicated.