Distrust Deficits, Government Effectiveness and Coronavirus Financing

Mike Seiferling

Public Finance Review, 2026, vol. 54, issue 1, 110-151

Abstract: This paper explores the role of political institutions, government effectiveness and, social trust in determining government financial responses to the coronavirus pandemic. The results from a globally representative sample of eighty countries over the Q3 2020 - Q3 2021 period suggest that politics did play a role in determining financial response to the coronavirus pandemic but the effects were more driven by current factors (electoral competition and executive fragmentation) and the effectiveness of, and trust in, government, than by institutional factors such as regime type or dynamic factors such as the political business cycle. Ineffective governments outspent effective ones with the magnitude of financial responses diverging as trust in government increases. These findings suggest that highly trusted effective governments were able to capitalize on trust premiums to minimize covid spending while highly trusted ineffective governments took advantage of trust premiums to maximize the size of their spending packages.

Keywords: coronavirus; coronavirus financing; public finance; political economy; trust; government effectiveness (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:54:y:2026:i:1:p:110-151

DOI: 10.1177/10911421251356655

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