Working Paper Number
To study the effect of political and institutional changes on the economy, we look at share prices in the Santiago exchange during the tumultuous political events that characterized Chile in the early 1970s. We use a transparent empirical strategy, deploying previously unused daily data and exploiting two largely unexpected shocks which involved substantial variation in policies and institutions, providing a rare natural experiment. Allende’s election and subsequent socialist experiment decreased share values, while the military coup and dictatorship that replaced him boosted them, in both cases by magnitudes unprecedented in the literature.
UMass Amherst Open Access Policy
Girardi, Daniele and Bowles, Samuel, "Institutional shocks and economic outcomes: Allende’s election, Pinochet’s coup and the Santiago stock market" (2017). UMass Amherst Economics Working Papers. 235.