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Global Crises and Populism: the Role of Eurozone Institutions

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  • Guiso, Luigi
  • Herrera, Helios
  • Morelli, Massimo
  • Sonno, Tommaso

Abstract

Populist parties are likely to gain consensus when mainstream parties and status quo institutions fail to manage the shocks faced by their economies. Institutional constraints, which limit the possible actions in the face of shocks, result in poorer performance and frustration among voters who turn to populist movements. We rely on this logic to explain the different support of populist parties among European countries in response to the globalization shock and to the 2008-2011 - financial and sovereign debt crisis. We predict a greater success of populist parties in response to these shocks in Euro zone countries, and our empirical analysis confirms this prediction. This is consistent with voters' frustration for the greater inability of the Euro zone governments to react to dicult-to-manage globalization shocks and financial crises. Our evidence has implications for the speed of construction of political unions. A slow, staged process of political unification can expose the EU to a risk of political backlash if hard to manage shocks hit the economies during the integration process.

Suggested Citation

  • Guiso, Luigi & Herrera, Helios & Morelli, Massimo & Sonno, Tommaso, 2018. "Global Crises and Populism: the Role of Eurozone Institutions," CEPR Discussion Papers 12944, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:12944
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Euro Area in the Age of COVID-19
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2020-05-17 11:53:03

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    Cited by:

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    2. Campos, Nauro F., 2019. "B for Brexit: A Survey of the Economics Academic Literature," IZA Discussion Papers 12134, Institute of Labor Economics (IZA).
    3. Fernanda L. Lopez de Leon & Markus Bindemann, 2019. "Social Effects of the Vote of the Majority: A Field-Experiment on the Brexit-Vote," Studies in Economics 1905, School of Economics, University of Kent.
    4. Alessandro Borin & Elisa Macchi & Michele Mancini, 2021. "EU transfers and euroscepticism: can’t buy me love?," Economic Policy, CEPR;CES;MSH, vol. 36(106), pages 237-286.
    5. Bellucci, Davide & Conzo, Pierluigi & Zotti, Roberto, 2019. "Perceived Immigration And Voting Behavior," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201915, University of Turin.
    6. Giray Gozgor, 2020. "The Role of Economic Uncertainty in Rising Populism in the EU," CESifo Working Paper Series 8499, CESifo.
    7. Italo Colantone & Piero Stanig, 2019. "The Surge of Economic Nationalism in Western Europe," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 128-151, Fall.
    8. Ľuboš Pástor & Pietro Veronesi, 2021. "Inequality Aversion, Populism, and the Backlash against Globalization," Journal of Finance, American Finance Association, vol. 76(6), pages 2857-2906, December.
    9. Campos, Luciano & Casas, Agustín, 2020. "Populism and income redistribution," Economics Letters, Elsevier, vol. 186(C).
    10. Albanese, Giuseppe & Barone, Guglielmo & de Blasio, Guido, 2022. "Populist voting and losers’ discontent: Does redistribution matter?," European Economic Review, Elsevier, vol. 141(C).
    11. Barone, Guglielmo & Kreuter, Helena, 2021. "Low-wage import competition and populist backlash: The case of Italy," European Journal of Political Economy, Elsevier, vol. 67(C).
    12. Benoit Crutzen & Dana Sisak & Otto Swank, 2020. "Left Behind Voters, Anti-Elitism and Popular Will," Tinbergen Institute Discussion Papers 20-055/VII, Tinbergen Institute.
    13. Arnstein Aassve & Gianmarco Daniele & Marco Le Moglie, 2018. "Never Forget the First Time: The Persistent Effects of Corruption and the Rise of Populism in Italy," BAFFI CAREFIN Working Papers 1896, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    14. Morelli, Massimo & Sasso, Greg, 2020. "Bureaucrats under Populism," CEPR Discussion Papers 14499, C.E.P.R. Discussion Papers.
    15. Kroll, Christian & Zipperer, Vera, 2020. "Sustainable Development and Populism," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 106723-1067.
    16. Andreas Dür & Christoph Moser & Gabriele Spilker, 2020. "The political economy of the European Union," The Review of International Organizations, Springer, vol. 15(3), pages 561-572, July.
    17. Gabriel, Ricardo Duque & Pessoa, Ana Sofia, 2020. "Adopting the Euro: a synthetic control approach," MPRA Paper 99391, University Library of Munich, Germany.
    18. Francesco Flaviano Russo, 2018. "Immigration and Nationalism: The Importance of Identity," CSEF Working Papers 511, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    19. Matteo Gamalerio & Massimo Morelli & Carlos Sanz & Albert Solé-Ollé & Pilar Sorribas-Navarro & Olle Folke & Johanna Rickne, 2020. "The Rise of New Political Parties in Western Democracies / El auge de nuevos partidos políticos en las democracias occidentales / L’ascens de nous partits polítics en les democràcies occidentals," IEB Reports ieb_report_2_2020, Institut d'Economia de Barcelona (IEB).
    20. Italo Colantone & Piero Stanig, 2018. "The Economic Determinants of the “Cultural Backlash”:Globalization and Attitudes in Western Europe," BAFFI CAREFIN Working Papers 1891, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.

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    More about this item

    Keywords

    Financial Dependence; Frustration; Globalization; populism; Relocation;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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