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Austerity and anarchy: budget cuts and social unrest in Europe, 1919-2008


Ponticelli, Jacopo; Voth, Hans-Joachim (2020). Austerity and anarchy: budget cuts and social unrest in Europe, 1919-2008. Journal of Comparative Economics, 48(1):1-19.

Abstract

Does fiscal consolidation lead to social unrest? Using cross-country evidence for the period 1919 to 2008, we examine the extent to which societies become unstable after budget cuts. We find a positive correlation between fiscal retrenchment and instability. Expenditure cuts are particularly potent in fueling protests; tax rises have only small effects. To isolate the effect of policy decisions on social unrest we exploit variation in neighboring countries’ past fiscal policies.

Abstract

Does fiscal consolidation lead to social unrest? Using cross-country evidence for the period 1919 to 2008, we examine the extent to which societies become unstable after budget cuts. We find a positive correlation between fiscal retrenchment and instability. Expenditure cuts are particularly potent in fueling protests; tax rises have only small effects. To isolate the effect of policy decisions on social unrest we exploit variation in neighboring countries’ past fiscal policies.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Economics and Econometrics
Uncontrolled Keywords:Economics and Econometrics
Language:English
Date:March 2020
Deposited On:11 Feb 2020 15:21
Last Modified:22 Sep 2020 11:55
Publisher:Elsevier
ISSN:0147-5967
OA Status:Closed
Publisher DOI:https://doi.org/10.1016/j.jce.2019.09.007

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