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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.

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.

"As we leave behind the tumultuous year of 2020, we have the growing sense that most Americans are eager to calm our strident politics and move forward in a way that brings peace, justice, and prosperity to all citizens, but particularly to Black Americans. Jason Riley argues that to do so, we have an obligation to look dispassionately at the policies of recent past administrations and decide which ones worked and which ones did not. Riley, a longtime columnist for the Wall Street Journal, has dug into the data and concluded that the economic lives of Black people improved under policies put into place during the Trump Administration. To admit as much is not to endorse the 45th president but rather to champion policies that achieve a clear moral end. From the inauguration day of 2017 until the onset of the pandemic in 2020, Black people in the United States enjoyed higher wages and homeownership, record-low unemployment and poverty, and a narrowing of social inequality. Without question, these are outcomes that everyone wants. The trouble is that we have fallen into the collective habit of allowing our disapproval of a political personality to skew our appraisal of effective policies. If we want to make actual progress, says Riley, we must look at what actually works, and keep doing it. We must not let partisanship allow us to sit back and watch these economic gains vanish, especially when we know better"--