Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2008
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. The results show a clear correlation between fiscal retrenchment and instability. Expenditure cuts are particularly potent in fueling protests; tax rises have only small and insignificant effects. We test if the relationship simply reflects economic downturns, using a recently-developed IMF dataset on exogenous expenditure shocks, and conclude that this is not the case. While autocracies and democracies show broadly similar responses to budget cuts, countries with more constraints on the executive are less likely to see unrest after austerity measures. Growing media penetration does not strengthen the effect of cut-backs on the level of unrest. We also find that austerity episodes that result in unrest lead to quick reversals of fiscal policy.
|Date of creation:||Oct 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +34 93 542-1222
Fax: +34 93 542-1223
Web page: http://www.barcelonagse.eu
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nicholas Bloom, 2009.
"The Impact of Uncertainty Shocks,"
Econometric Society, vol. 77(3), pages 623-685, 05.
- Alesina, A. & Drazen, A., 1991.
"Why Are Stabilizations Delayed?,"
6-91, Tel Aviv - the Sackler Institute of Economic Studies.
- Anjali Thomas Bohlken & Ernest John Sergenti, 2010. "Economic growth and ethnic violence: An empirical investigation of Hinduâ€”Muslim riots in India," Journal of Peace Research, Peace Research Institute Oslo, vol. 47(5), pages 589-600, September.
- Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September.
- Kevin Hjortshøj O'Rourke & Alan de Bromhead, 2012.
"Right Wing Political Extremism in the Great Depression,"
Economics Series Working Papers
Number 95, University of Oxford, Department of Economics.
- Alan de Bromhead & Barry Eichengreen & Kevin H.O’Rourke, 2012. "Right Wing Political Extremism in the Great Depression," Oxford University Economic and Social History Series _095, Economics Group, Nuffield College, University of Oxford.
- Alan de Bromhead & Barry Eichengreen & Kevin H. O'Rourke, 2012. "Right-Wing Political Extremism in the Great Depression," NBER Working Papers 17871, National Bureau of Economic Research, Inc.
- de Bromhead, Alan & Eichengreen, Barry & O'Rourke, Kevin Hjortshøj, 2012. "Right Wing Political Extremism in the Great Depression," CEPR Discussion Papers 8876, C.E.P.R. Discussion Papers.
- King, R.G. & Baxter, M., 1990.
"Fiscal Policy In General Equilibrium,"
RCER Working Papers
244, University of Rochester - Center for Economic Research (RCER).
- Valerie A. Ramey, 2011.
"Identifying Government Spending Shocks: It's all in the Timing,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 126(1), pages 1-50.
- Valerie A. Ramey, 2009. "Identifying Government Spending Shocks: It's All in the Timing," NBER Working Papers 15464, National Bureau of Economic Research, Inc.
- Christina D. Romer & David H. Romer, 1989.
"Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz,"
in: NBER Macroeconomics Annual 1989, Volume 4, pages 121-184
National Bureau of Economic Research, Inc.
- Romer, Christina D. & Romer, David H., 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," Department of Economics, Working Paper Series qt5h07k8vf, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Christina D. Romer & David H. Romer, 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," NBER Working Papers 2966, National Bureau of Economic Research, Inc.
- Christina D. Romer and David H. Romer., 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," Economics Working Papers 89-107, University of California at Berkeley.
- Joachim Voth, 2011. "Tightening Tensions: Fiscal Policy and Civil Unrest in Eleven South American Countries, 1937 - 1995," Working Papers Central Bank of Chile 612, Central Bank of Chile.
- Erica Field & Matthew Levinson & Rohini Pande & Sujata Visaria, 2008.
"Segregation, Rent Control, and Riots: The Economics of Religious Conflict in an Indian City,"
Boston University - Department of Economics - The Institute for Economic Development Working Papers Series
dp-174, Boston University - Department of Economics.
- Erica Field & Matthew Levinson & Rohini Pande & Sujata Visaria, 2008. "Segregation, Rent Control, and Riots: The Economics of Religious Conflict in an Indian City," American Economic Review, American Economic Association, vol. 98(2), pages 505-10, May.
- John Ferejohn, 1986. "Incumbent performance and electoral control," Public Choice, Springer, vol. 50(1), pages 5-25, January.
- Alesina, Alberto Francesco & Perotti, Roberto & Tavares, Jose, 1998. "The Political Economy of Fiscal Adjustments," Scholarly Articles 12553724, Harvard University Department of Economics.
- Daniel Leigh & Andrea Pescatori & Jaime Guajardo, 2011. "Expansionary Austerity New International Evidence," IMF Working Papers 11/158, International Monetary Fund.
- Acemoglu, Daron & Robinson, James A, 1998.
"Why did the West Extend the Franchise? Democracy, Inequality and Growth in Historical Perspective,"
CEPR Discussion Papers
1797, C.E.P.R. Discussion Papers.
- Daron Acemoglu & James A. Robinson, 2000. "Why Did The West Extend The Franchise? Democracy, Inequality, And Growth In Historical Perspective," The Quarterly Journal of Economics, MIT Press, vol. 115(4), pages 1167-1199, November.
- Timur Kuran, 1989. "Sparks and prairie fires: A theory of unanticipated political revolution," Public Choice, Springer, vol. 61(1), pages 41-74, April.
- Olivier Jean Blanchard, 1990. "Suggestions for a New Set of Fiscal Indicators," OECD Economics Department Working Papers 79, OECD Publishing.
- DiPasquale, Denise & Glaeser, Edward L., 1998. "The Los Angeles Riot and the Economics of Urban Unrest," Journal of Urban Economics, Elsevier, vol. 43(1), pages 52-78, January.
- Andrea Pescatori & Daniel Leigh & Jaime Guajardo & Pete Devries, 2011. "A New Action-Based Dataset of Fiscal Consolidation," IMF Working Papers 11/128, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:bge:wpaper:676. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruno Guallar)
If references are entirely missing, you can add them using this form.