Macroeconomic Consequences of Financial Shocks

2005 ◽  
Author(s):  
Balazs Vonnak
Keyword(s):  
Financial Shocks

How Voters Respond to Currency Crises: Evidence From Turkey

2021 ◽  
pp. 001041402110602
Author(s):  
David A. Steinberg
Keyword(s):  
International Trade ◽  
Public Opinion ◽  
Survey Data ◽  
Currency Crises ◽  
Political Attitudes ◽  
Economic Situation ◽  
Financial Shocks ◽  
The Government ◽  
Original Survey ◽  
And Migration

A burgeoning literature shows that international trade and migration shocks influence individuals’ political attitudes, but relatively little is known about how international financial shocks impact public opinion. This study examines how one prevalent type of international financial shock—currency crises—shapes mass political attitudes. I argue that currency crises reduce average citizens’ support for incumbent governments. I also expect voters’ concerns about their own pocketbooks to influence their response to currency crises. Original survey data from Turkey support these arguments. Exploiting exogenous variation in the currency’s value during the survey window, I show that currency depreciations strongly reduce support for the government. This effect is stronger among individuals that are more negatively affected by depreciation, and it is moderated by individuals’ perceptions of their personal economic situation. This evidence suggests that international financial shocks can strongly influence the opinions of average voters, and it provides further support for pocketbook theories.

scholarly journals Governmental financial resilience under austerity in Austria, England and Italy: How do local governments cope with financial shocks?

2017 ◽  
Vol 95 (3) ◽  
pp. 670-697 ◽  
Author(s):  
Carmela Barbera ◽  
Martin Jones ◽  
Sanja Korac ◽  
Iris Saliterer ◽  
Ileana Steccolini
Keyword(s):  
Local Governments ◽  
Financial Shocks

scholarly journals Financial shocks and inflation dynamics

2021 ◽  
pp. 1-29
Author(s):  
Angela Abbate ◽  
Sandra Eickmeier ◽  
Esteban Prieto
Keyword(s):  
Financial Crisis ◽  
Great Recession ◽  
Policy Implication ◽  
Vector Autoregressive Model ◽  
Financial Shocks ◽  
Trade Off ◽  
Vector Autoregressive ◽  
The Great Recession ◽  
Short Run ◽  
Dual Mandate

Abstract We assess the effects of financial shocks on inflation, and to what extent financial shocks can account for the “missing disinflation” during the Great Recession. We apply a Bayesian vector autoregressive model to US data and identify financial shocks through a combination of narrative and short-run sign restrictions. Our main finding is that contractionary financial shocks temporarily increase inflation. This result withstands a large battery of robustness checks. Negative financial shocks help therefore to explain why inflation did not drop more sharply in the aftermath of the financial crisis. Our analysis suggests that higher borrowing costs after negative financial shocks can account for the modest decrease in inflation after the financial crisis. A policy implication is that financial shocks act as supply-type shocks, moving output and inflation in opposite directions, thereby worsening the trade-off for a central bank with a dual mandate.

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