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Political consequences of economic shocks: evidence fom poland


Ahlquist, John; Copelovitch, Mark; Walter, Stefanie (2018). Political consequences of economic shocks: evidence fom poland. CIS Working Paper 97, University of Zurich.

Abstract

How do economic shocks influence domestic politics? We take advantage of a surprise revaluation of the Swiss franc in early 2015 to identify the Polish citizens with clear and direct economic exposure: those repaying mortgages denominated in Swiss francs. Using original survey data collected just prior to the 2015 Polish parliamentary elections and comparing current with past foreign exchange borrowers, we show that individuals directly exposed to the shock were much more likely to demand government support. Those with no exposure to the shock were less likely to express an opinion on the matter. Current borrowers’ preferences for a generous resolution scheme translated into distinct voting behavior. Among former government voters, Swiss franc borrowers were more likely to desert the government and vote for the largest opposition party, the PiS, which had promised the most generous bailout plan. The evidence suggests that the PiS was able to use the franc shock to expand its electoral coalition beyond its core voters to include those directly affected by the franc shock, a subgroup otherwise unlikely to support the PiS. Simulation results indicate that, absent the franc shock, the PiS is unlikely to have won a parliamentary majority.

Abstract

How do economic shocks influence domestic politics? We take advantage of a surprise revaluation of the Swiss franc in early 2015 to identify the Polish citizens with clear and direct economic exposure: those repaying mortgages denominated in Swiss francs. Using original survey data collected just prior to the 2015 Polish parliamentary elections and comparing current with past foreign exchange borrowers, we show that individuals directly exposed to the shock were much more likely to demand government support. Those with no exposure to the shock were less likely to express an opinion on the matter. Current borrowers’ preferences for a generous resolution scheme translated into distinct voting behavior. Among former government voters, Swiss franc borrowers were more likely to desert the government and vote for the largest opposition party, the PiS, which had promised the most generous bailout plan. The evidence suggests that the PiS was able to use the franc shock to expand its electoral coalition beyond its core voters to include those directly affected by the franc shock, a subgroup otherwise unlikely to support the PiS. Simulation results indicate that, absent the franc shock, the PiS is unlikely to have won a parliamentary majority.

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Additional indexing

Item Type:Working Paper
Communities & Collections:06 Faculty of Arts > Institute of Political Science
Dewey Decimal Classification:320 Political science
Language:English
Date:2018
Deposited On:11 Dec 2018 15:40
Last Modified:15 Apr 2021 14:55
Series Name:CIS Working Paper
Number of Pages:37
ISSN:1662-7504
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Official URL:https://www.ethz.ch/content/dam/ethz/special-interest/gess/cis/cis-dam/CIS_DAM_2018/WP97_A4.pdf
Related URLs:http://www.cis.ethz.ch/research/working-papers.html (Organisation)

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