Behind every financial crisis lurks a "political bubble"--policy biases that foster market behaviors leading to financial instability. Rather than tilting against risky behavior, political bubbles--arising from a potent combination of beliefs, institutions, and interests--aid, abet, and amplify...

The authors apply a dynamic spatial model to interest group ratings of the members of Congress over the period 1959-81. Spatial distances between an interest group and the members of Congress are assumed to be monotonic with the ratings. Their pooled cross-sectional time-series data set consists...