The electoral consequences of large fiscal adjustments

Description

"The conventional wisdom regarding the political consequences of large reductions of budget deficits is that they are very costly for the governments which implement them: they are punished by voters at the following elections. In the present paper, instead, we find no evidence that governments which quickly reduce budget deficits are systematically voted out of office in a sample of 19 OECD countries from 1975 to 2008. We also take into consideration issues of reverse causality, namely the possibility that only "strong and popular" governments can implement fiscal adjustments and thus they are not voted out of office "despite" having reduced the deficits. In the end we conclude that many governments can reduce deficits avoiding an electoral defeat.Published: The Electoral Consequences of Large Fiscal Adjustments, Alberto Alesina, Dorian Carloni, Giampaolo Lecce, in Fiscal Policy after the Financial Crisis (2012), University of Chicago Press"--National Bureau of Economic Research web site.

Subjects

Series Statement

• NBER working paper series -- working paper 17655
• Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17655.

Links

• http://www.nber.org/papers/w17655