Latin America experienced a deep political transformation from authoritarianism to democracy in the recent decades. During the same period, many countries in the region also suffered severe currency crises. We contend that these two phenomena are causally related. Specifically, we argue that democratic transitions increase political demand for public spending, leading to budget deficits, and this increases investors’ propensity to liquidate local currency holdings. Moreover, we note an important ‘threshold’ effect, in which democratisation is particularly likely to lead to currency crises when the pre-existing fiscal deficits are already relatively high. Statistical analysis confirms these arguments in a sample of 25 Latin American countries in the period from 1975 to 2008.

中文翻译：

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拉丁美洲的民主化和货币危机（1975-2008）

近几十年来，拉丁美洲经历了从威权主义到民主的深刻政治转变。同期，该地区许多国家也遭受了严重的货币危机。我们认为这两种现象是有因果关系的。具体而言，我们认为民主转型增加了对公共支出的政治需求，导致预算赤字，这增加了投资者清算本币持有量的倾向。此外，我们注意到一个重要的“门槛”效应，即当预先存在的财政赤字已经相对较高时，民主化特别有可能导致货币危机。统计分析在 1975 年至 2008 年期间对 25 个拉丁美洲国家的样本中证实了这些论点。