Austerity and Elections

Bibliographic Data

ID23198751
AuthorsAlberto Alesina (Harvard University Press), Gabriele Ciminelli (0000-0002-5785-255X, International Monetary Fund), Davide Furceri (International Monetary Fund), Giorgio Saponaro (Harvard University Press)
Year2021
Volume2021
Issue121
Pages1
Publication date2021-04-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueIMF Working Paper (JOURNAL)
Journal identifiersISSN: 1018-5941 • E-ISSN: 2227-8885
PublisherInternational Monetary Fund (IMF) (PUBLISHER)
DOI10.5089/9781513573724.001
OpenAlexW4243166100
ISBN9781513573724
LanguageEN
Citations received3
References cited19

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.

Austerity · Political science · Politics · Law · Social Policy and Reform Studies

Tools

Open DOIOpen Access