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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Autore principale: Alesina, Alberto
Altri autori: Ciminelli, Gabriele, Furceri, Davide, Saponaro, Giorgio
Natura: Periodico
Lingua:English
Pubblicazione: Washington, D.C. : International Monetary Fund, 2021.
Serie:IMF Working Papers; Working Paper ; No. 2021/121
Soggetti:
Accesso online:Full text available on IMF
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245 1 0 |a Austerity and Elections /  |c Alberto Alesina, Gabriele Ciminelli, Davide Furceri, Giorgio Saponaro. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 2021. 
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520 3 |a 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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650 7 |a National Government Expenditures and Related Policies  |2 imf 
650 7 |a Taxation, Subsidies, and Revenues  |2 imf 
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700 1 |a Ciminelli, Gabriele. 
700 1 |a Furceri, Davide. 
700 1 |a Saponaro, Giorgio. 
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