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The Macroeconomy and Individuals’ Support for Democracy

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  • Friedrichsen, J.
  • Zahn, P.

Abstract

How important are national macroeconomic indicators for people’s satisfaction with democracy? This paper empirically explores the link from macroeconomic variables to support for established democratic systems. We combine country-level data on growth, inflation, and unemployment from the OECD with survey data from the Eurobarometer for nineWestern European countries for the period 1976-2001. We regress individual satisfaction with democracy on macroeconomic variables and individual controls. Our regressions include country-specific time trends as well as fixed effects for countries and surveyyears. Pooling observations from nine countries, we find that growth (inflation and unemployment) is positively (negatively) correlated with satisfaction with democracy. The effect goes beyond what can be explained by individual characteristics and is non-negligible if interpreted in light of the recent economic crisis. Our findings are robust to alternative specifications using logit and ordered logit models.

Suggested Citation

  • Friedrichsen, J. & Zahn, P., 2011. "The Macroeconomy and Individuals’ Support for Democracy," Cambridge Working Papers in Economics 1104, Faculty of Economics, University of Cambridge.
  • Handle: RePEc:cam:camdae:1104
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    References listed on IDEAS

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    1. Nannestad, Peter & Paldam, Martin, 1994. "The VP-Function: A Survey of the Literature on Vote and Popularity Functions after 25 Years," Public Choice, Springer, vol. 79(3-4), pages 213-245, June.
    2. Przeworski,Adam & Alvarez,Michael E. & Cheibub,Jose Antonio & Limongi,Fernando, 2000. "Democracy and Development," Cambridge Books, Cambridge University Press, number 9780521793797.
    3. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    4. Martin Halla & Friedrich Schneider & Alexander Wagner, 2013. "Satisfaction with democracy and collective action problems: the case of the environment," Public Choice, Springer, vol. 155(1), pages 109-137, April.
    5. Wagner, Alexander F. & Schneider, Friedrich & Halla, Martin, 2009. "The quality of institutions and satisfaction with democracy in Western Europe -- A panel analysis," European Journal of Political Economy, Elsevier, vol. 25(1), pages 30-41, March.
    6. Przeworski,Adam & Alvarez,Michael E. & Cheibub,Jose Antonio & Limongi,Fernando, 2000. "Democracy and Development," Cambridge Books, Cambridge University Press, number 9780521790321.
    7. Robert MacCulloch & Silvia Pezzini, 2007. "Money, religion and revolution," Economics of Governance, Springer, vol. 8(1), pages 1-16, January.
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    More about this item

    Keywords

    Satisfaction with democracy; Economic Growth; Political Economy;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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