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Democracy and fiscal-policy responses to COVID-19

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  • Ceyhun Elgin
  • Abdullah Yalaman
  • Sezer Yasar

Abstract

In this paper, we investigate the relationship between the level of democracy and fiscal-policy response to the economic crisis induced by the COVID-19 pandemic. We use a novel cross-country dataset of fiscal-policy responses with time variation. Our results suggest that more democratic countries adopted substantially larger fiscal-policy packages (in % GDP) and the gap regarding the size of packages between more democratic and less democratic countries widened over time. Moreover, our regressions with different measures of democracy as well as instrumental variable estimations support a robust and causal relationship between a higher level of democracy and a larger fiscal-package size.

Suggested Citation

  • Ceyhun Elgin & Abdullah Yalaman & Sezer Yasar, 2021. "Democracy and fiscal-policy responses to COVID-19," CAMA Working Papers 2021-62, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:camaaa:2021-62
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    Cited by:

    1. Ceyhun Elgin & Colin C. Williams & Gamze Oz‐Yalaman & Abdullan Yalaman, 2022. "Fiscal stimulus packages to COVID‐19: The role of informality," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(4), pages 861-879, May.

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    More about this item

    Keywords

    COVID-19; Democracy; Fiscal Policy; Pandemic;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H59 - Public Economics - - National Government Expenditures and Related Policies - - - Other

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