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Has the Financial Crisis Shattered Citizens’ Trust in National and European Governmental Institutions? Evidence from the EU Member States, 1999–2010

In: Public Support for the Euro

Author

Listed:
  • Felix Roth

    (University of Hamburg)

  • Felicitas Nowak-Lehmann D.

    (University of Göttingen)

  • Thomas Otter

    (University of Göttingen)

Abstract

The financial crisis has affected trust in national and European governmental institutions in different ways. This contribution analyses the determinants of trust in the national and European institutions over the last decade and comes to the conclusion that inflation reduces citizens’ trust only when the economy runs smoothly. In times of crisis, citizens do not worry about inflation but rather about jobs and the effects of a recession. Declining trust in national governments is related to an increase in unemployment in the EU-15 in all time periods, whereas trust in the European Commission and the European Parliament seems to be strongly associated with the situation in the real economy (unemployment and growth of GDP per capita) only in times of crisis. Yet in the EU-27, falling levels of trust in the national and European governmental institutions during times of crisis seem to be primarily related to an increase in government debt. In an EU-15 country sample, this negative relationship appears to be driven by countries that owe a larger share of their increase in government debt to aiding/bailing out their financial sectors and the implementation of significant austerity measures.

Suggested Citation

  • Felix Roth & Felicitas Nowak-Lehmann D. & Thomas Otter, 2022. "Has the Financial Crisis Shattered Citizens’ Trust in National and European Governmental Institutions? Evidence from the EU Member States, 1999–2010," Contributions to Economics, in: Public Support for the Euro, chapter 0, pages 187-217, Springer.
    • Handle: RePEc:spr:conchp:978-3-030-86024-0_10
    DOI: 10.1007/978-3-030-86024-0_10
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    More about this item

    Keywords

    Financial crisis; Trust; Debt; European governmental institutions;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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