22/06/2008 6:58:24 pm
If You Reform Financial Markets, the Chances of Re-Election Increase. Three economists affiliated with the European Commission - Marco Buti, Alessandro Turrini and Paul van den Noord - have taken my book as a starting-point for further research. They have studied 21 OECD countries 1985-2004 focusing on which governments were actually re-elected.

They do confirm that reformers are at least as likely to get re-elected as non-reformers. But they also find that 65 per cent of the re-elected reformers governed in countries with high financial freedom. Liberalising financial markets, thus, seems to improve the chances of re-election.

This may be perfectly logical, because many reforms have a short-term cost and long-term greater gain. But the short-term loss is smaller if free financial markets can compensate for a temporary loss of income. This might make voters more likely to accept the short-term cost.

Read their paper here - >