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Economic uncertainty and divisive politics: evidence from the dos Españas

Author

Listed:
  • Sandra García-Uribe

    (Banco de España)

  • Hannes Mueller

    (IAE (CSIC) and Barcelona GSE)

  • Carlos Sanz

    (Banco de España)

Abstract

This article exploits two newspaper archives to track economic policy uncertainty in Spain in 1905-1945, a period of extreme political polarization. We find that the outbreak of the civil war in 1936 was anticipated by a striking upward level shift of uncertainty in both newspapers. We study the dynamics behind this shift and provide evidence of a strong empirical link between increasing uncertainty and the rise of divisive political issues at the time: socio-economic conflict, regional separatism, power of the military, and role of the church. This holds even when we exploit variation in content at the newspaper level.

Suggested Citation

  • Sandra García-Uribe & Hannes Mueller & Carlos Sanz, 2021. "Economic uncertainty and divisive politics: evidence from the dos Españas," Working Papers 2102, Banco de España.
    • Handle: RePEc:bde:wpaper:2102
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    More about this item

    Keywords

    economic policy uncertainty; civil war; social conflict; agrarian reform; natural language processing; tf-idf;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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