Template-type: ReDIF-Paper 1.0
Author-Name: Donato Masciandaro
Author-Name:Federico Faveretto
Title:Populism, Group Thinking and Banking Policy
Abstract: This paper builds a model of populism called Democratic Rioting in which citizens - i.e., the poor and teh rich - are assumed to be heavily influenced by psychological group dynamics that result from banking shocks. We highlight a display of anger that is channelled through an election instead of in the streets. In turn the anger - a self-serving bias - can be influenced by non-financial news about immigration, welfare plans and housing plans. Therefore after a banking shock the consensus on a myopic populisr policy can depend on many issues that have nothing to do with the bailout decision itself. We describe a mechanism that can be applied to the aftermath of both the Great Recession and the Great Depression.
Classification-JEL: D72, D78, E31, E52, E58, E62, E71 
Keywords: Populism, Political Economics, Behavioural economics, Financial inequality, Banking policy
Length: 18
Number: 20133
Creation-Date: 2020
File-URL: https://repec.unibocconi.it/baffic/baf/papers/cbafwp20133.pdf
File-Format: application/pdf
File-Size: 8079
Handle: RePEc:baf:cbafwp:cbafwp20133