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Does government ideology shake or shape the public finances? Empirical evidence of disaster assistance

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  • Klomp, Jeroen

Abstract

This study explores whether the public spending provided in response to a natural disaster is influenced by the political ideology of the incumbent government. We use a global panel of about 90 democratic countries. Political parties have different preferences regarding policies that redistribute income within a country after a natural disaster. The estimates of a dynamic panel model clearly indicate that left-wing governments allocate about 2.8 percent more public support per capita in the aftermath of a disaster than right-wing cabinets do. Besides, cabinets that consist of at least one nationalistic political party provide about 0.9 percent more disaster assistance than other coalitions. One explanation is that natural disasters may reinforce the feelings of voters related to the national identity and domestic solidarity. Finally, it turns out that the ideology effect is most visible in political systems with direct elections as it is easier to target affected voters in these systems.

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  • Klomp, Jeroen, 2019. "Does government ideology shake or shape the public finances? Empirical evidence of disaster assistance," World Development, Elsevier, vol. 118(C), pages 118-127.
    • Handle: RePEc:eee:wdevel:v:118:y:2019:i:c:p:118-127
    DOI: 10.1016/j.worlddev.2019.02.013
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    2. Polyzos, Stathis & Samitas, Aristeidis & Kampouris, Ilias, 2021. "Economic stimulus through bank regulation: Government responses to the COVID-19 crisis," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    3. Capuno, Joseph & Corpuz, Jose & Lordemus, Samuel, 2022. "Natural Disasters and Local Government Finance : Evidence from Typhoon Haiyan," The Warwick Economics Research Paper Series (TWERPS) 1411, University of Warwick, Department of Economics.
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    More about this item

    Keywords

    Government ideology; Public spending; Natural disasters;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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