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Economic Uncertainty and Divisive Politics: Evidence from the dos Españas

Sandra García-Uribe, Hannes Mueller and Carlos Sanz

No 1240, Working Papers from Barcelona Graduate School of Economics

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; political polarization; 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)
Date: 2021-03
New Economics Papers: this item is included in nep-his and nep-isf
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