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Electoral Effects of Public Sector Austerity Efforts in the United Kingdom 1900-2015

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  • Rozana Himaz

Abstract

This paper investigates empirically whether large expenditure cuts and revenue rises that were the result of deliberate political efforts towards being austere had an impact on electoral outcomes in the UK using data from 1900 to 2015. The main electoral outcomes considered are the change in ruling party ideology and the margin of victory faced by the incumbent at the general election, in terms of seats secured. The paper finds that large cuts in spending and large rises in revenue significantly increases the chance of a government changing. However, the loss in seats were significantly higher for the incumbent compared to the winning partly only when large spending cuts were pursued rather than revenue increases during the incumbent's tenure in office. We also find that voters are sensitive to particular types of spending cuts, such as cuts in social security. These results are contrary to those in Alesina et.al (2013) using OECD data for 19 countries from 1975-2008, and several other papers in the empirical literature that found no significant correlation between fiscal adjustment and electoral looses.

Suggested Citation

  • Rozana Himaz, 2015. "Electoral Effects of Public Sector Austerity Efforts in the United Kingdom 1900-2015," Economics Series Working Papers 773, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:773
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    References listed on IDEAS

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    1. Akhmed Akhmedov & Ekaterina Zhuravskaya, 2004. "Opportunistic Political Cycles: Test in a Young Democracy Setting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(4), pages 1301-1338.
    2. Sam Peltzman, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 327-361.
    3. Christina D. Romer & David H. Romer, 2010. "The Macroeconomic Effects of Tax Changes: Estimates Based on a New Measure of Fiscal Shocks," American Economic Review, American Economic Association, vol. 100(3), pages 763-801, June.
    4. Morris, Richard & Schuknecht, Ludger, 2007. "Structural balances and revenue windfalls: the role of asset prices revisited," Working Paper Series 737, European Central Bank.
    5. Hood, Christopher & Himaz, Rozana, 2017. "A Century of Fiscal Squeeze Politics: 100 Years of Austerity, Politics, and Bureaucracy in Britain," OUP Catalogue, Oxford University Press, number 9780198779612.
    6. Wolswijk, Guido, 2007. "Short- and long-run tax elasticities: the case of the Netherlands," Working Paper Series 763, European Central Bank.
    7. Allan Drazen, 2001. "The Political Business Cycle after 25 Years," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 75-138, National Bureau of Economic Research, Inc.
    8. Alberto Alesina & Dorian Carloni & Giampaolo Lecce, 2012. "The Electoral Consequences of Large Fiscal Adjustments," NBER Chapters, in: Fiscal Policy after the Financial Crisis, pages 531-570, National Bureau of Economic Research, Inc.
    9. Alberto Alesina & Roberto Perotti & José Tavares, 1998. "The Political Economy of Fiscal Adjustments," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 197-266.
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    More about this item

    Keywords

    Fiscal austerity; electoral outcomes; United Kingdom;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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