The clever research folks of VOX, put out a brief paper analysing the relationship between government popularity and financial crises, not too surprisingly, emerging markets generally have a crash post incredibly popular governments, its a interesting good read, see below for more, enjoy.

Our main finding is that ‘political booms’, defined as an increase in government popularity, precede financial crises in emerging markets. The public’s opinion of the current government improves significantly in the run-up to a country’s financial crash. Interestingly, however, political booms only predict financial crises in emerging markets, not in advanced economies.

Figure 1: Cum. change in gov popularity (5 years pre crisis)

govpop

Source: Vox

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