Political consequences of (consumer) debt relief

Toke Aidt, Zareh Asatryan and Lusine Badalyan

No 24-030, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Many governments operate consumer debt relief programs, often timed to match the election cycle, but their political effects are not well understood. We ask if debt relief can influence elections in democracies. Our motivating exercise is the Biden administration's promise to relieve student debt. We utilize quasi-experimental variation generated by another very large debt relief program enacted in the Republic of Georgia that, similar to USA, affected every sixth voter. We estimate that the program helped the incumbent candidate win that election, and that its effects persisted. Overall, we show how economic power can translate into political power in democracies.

Keywords: Consumer debt relief; US student debt; distributive politics; vote buying; elections (search for similar items in EconPapers)
JEL-codes: D72 G51 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-mac, nep-pol and nep-tra
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:300009

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