Can Credit Tightening Spur Social Unrest? Evidence from 1930s China

In 1933 the United States launched its Silver Purchase program, which raised silver prices worldwide, drained China’s silver stock, and caused credit to Chinese firms to contract sharply. In a new paper, economists at Tilburg and Bocconi universities use the incident as a natural experiment to examine whether economic shocks can trigger labor unrest and boost support for fringe political parties.  

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Return of the State: Banking on Diplomacy

If, as California political legend Jesse M. Unruh once quipped, “money is the mother’s milk of politicians,” it’s reasonable to expect that countries might wield their financial power for geopolitical purposes on the world stage. Accordingly, a fascinating new paper slated to be presented at the upcoming Stigler Center Political Economy of Finance conference tracks how China punishes countries whose heads of state accept meetings with the Dalai Lama by curbing bilateral lending flows from its state banks.  

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What Prompts Young People to Invest in Their Human Capital? New Data on DACA and Dreamers Offers Some Stark Evidence

The Deferred Action for Childhood Arrivals program—a deportation deferral initiative for immigrants brought to the United States without documents as children—provided a large shock to returns to education for a substantial population of at-risk youth. A new NBER paper finds an extraordinary impact of DACA on Dreamers’ decisions to finish high school, go to college, or get pregnant as teenagers.  

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Populism and Time Inconsistency

This recent VoxEU.org column analyzes the recent ascendance of populists across the international stage through the lens of the concept of ‘time inconsistency’—that is, the possible mismatch between what might be optimal today and what might be optimal over the longer term. Populist leaders, according to Mario Blejer and Piroska Nagy-Mohacsi, are time consistent in their constant objective of maximizing their own power. The authors propose some commitment devices to guard against populist abuses.  

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