Front Matter Page
Policy Development and Review Department
Authorized for distribution by Ydahlia Metzgen
Contents
I. Introduction
II. Quantifying Political Instability: Methodology
A. Political Polarization: The Effective Number of Parties
B. Political Cohesion of the Government: The COAL Variable
C. Measuring Electoral Indecision: The Volatility Index
D. Election Dates: ELECD
E. Tornell’s 23 Country Sample
III. Estimation and Regression Results
A. Specification of Tornell’ s Model
B. Regression Results and Interpretation
1. Regression Results and Tests of Robustness
2. Interpretation
IV. Conclusion
Tables
1. Residuals from Regressions Using Economic and Political Variables
2. Regression Results
3a. Testing for Robustness on VOLAT
3b. Testing for Robustness on Election Variables
Figures
1. Exchange Rate Depreciation and Presidential Elections in Mexico
2. Index of Economic Vulnerability
3. Actual and Fitted Crisis Indices Using Economic and Political Variables
4. Residuals from Regressions Using Economic and Political Variables
Text Boxes
1. Key Features of Political Variables
2. Variables in Tornell’s Model
Annexes
I. A Formal Model of the Impact of Elections on Exchange Rate and Banking Crises
II. Data
III. Key Statistical Indicators for the Economic and Political Variables
Bibliography