Democracy and fiscal-policy responses to COVID-19

Ceyhun Elgin, Abdullah Yalaman and Sezer Yasar

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

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.

Keywords: COVID-19; Democracy; Fiscal Policy; Pandemic (search for similar items in EconPapers)
JEL-codes: D72 H12 H30 H59 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2021-07
New Economics Papers: this item is included in nep-mac and nep-pol
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Democracy and fiscal-policy response to COVID-19 (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2021-62

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