Austerity and Elections /

Conventional wisdom holds that voters punish governments that implement fiscal austerity. Yet, most empirical studies, which rely on ex-post yearly austerity measures, do not find supportive evidence. This paper revisits the issue using action-based, real-time, ex-ante measures of fiscal austerity a...

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Bibliografische gegevens
Hoofdauteur: Alesina, Alberto
Andere auteurs: Ciminelli, Gabriele, Furceri, Davide, Saponaro, Giorgio
Formaat: Tijdschrift
Taal:English
Gepubliceerd in: Washington, D.C. : International Monetary Fund, 2021.
Reeks:IMF Working Papers; Working Paper ; No. 2021/121
Onderwerpen:
Online toegang:Full text available on IMF
Omschrijving
Samenvatting:Conventional wisdom holds that voters punish governments that implement fiscal austerity. Yet, most empirical studies, which rely on ex-post yearly austerity measures, do not find supportive evidence. This paper revisits the issue using action-based, real-time, ex-ante measures of fiscal austerity as well as a new database of changes in vote shares of incumbent parties. The analysis emphasizes the importance of the 'how'-whether austerity is done via tax hikes or expenditure cuts-and the 'who'-whether it is carried out by left- vs. right-leaning governments. Our main finding is that tax-based austerity carries large electoral costs, while the effect of expenditure-based consolidations depends on the political-leaning of the government. An austerity package worth 1% of GDP, carried out mostly through tax hikes, reduces the vote share of the leader's party by about 7%. In contrast, expenditure-based austerity is detrimental for left- but beneficial for right-leaning governments. We also find that the electoral cost of austerity-especially tax hikes-can be contained if it is implemented during good economic times.
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Fysieke beschrijving:1 online resource (70 pages)
Formaat:Mode of access: Internet
ISSN:1018-5941
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