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Economic uncertainty and divisive politics: evidence from the dos Españas

Sandra García-Uribe, Hannes Mueller and Carlos Sanz

No 2102, Working Papers from Banco de España

Abstract: This article exploits two newspaper archives to track economic policy uncertainty in Spain in 1905-1945, a period of extreme political polarization. We find that the outbreak of the civil war in 1936 was anticipated by a striking upward level shift of uncertainty in both newspapers. We study the dynamics behind this shift and provide evidence of a strong empirical link between increasing uncertainty and the rise of divisive political issues at the time: socio-economic conflict, regional separatism, power of the military, and role of the church. This holds even when we exploit variation in content at the newspaper level.

Keywords: economic policy uncertainty; civil war; social conflict; agrarian reform; natural language processing; tf-idf (search for similar items in EconPapers)
JEL-codes: D72 D74 N14 N24 N44 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2021-01
New Economics Papers: this item is included in nep-his and nep-pol
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https://www.bde.es/f/webbde/SES/Secciones/Publicac ... 21/Files/dt2102e.pdf First version, January 2021 (application/pdf)

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Working Paper: Economic Uncertainty and Divisive Politics: Evidence from the dos Españas (2021) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2102

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