Austerity and anarchy: Budget cuts and social unrest in Europe, 1919–2008

Jacopo Ponticelli and Hans-Joachim Voth

Journal of Comparative Economics, 2020, vol. 48, issue 1, 1-19

Abstract: Does fiscal consolidation lead to social unrest? Using cross-country evidence for the period 1919 to 2008, we examine the extent to which societies become unstable after budget cuts. We find a positive correlation between fiscal retrenchment and instability. Expenditure cuts are particularly potent in fueling protests; tax rises have only small effects. To isolate the effect of policy decisions on social unrest we exploit variation in neighboring countries’ past fiscal policies.

Date: 2020
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Related works:
Working Paper: Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2008 (2015)
Working Paper: Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2008 (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:48:y:2020:i:1:p:1-19

DOI: 10.1016/j.jce.2019.09.007

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