Inflation Surprises and Election Outcomes

Jonathan Federle, Cathrin Mohr and Moritz Schularick

No 19741, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study the political consequences of inflation surprises, focusing on votes for extremist and populist parties in 365 elections in 18 advanced economies since 1948. Inflation surprises are regularly followed by a substantial increase in vote shares of extremist, anti-system, and populist parties. An inflation surprise of 10 percentage points leads to a 15% increase in their vote share, comparable to the increase typically seen after financial crises. We show that the change in voting behavior is particularly pronounced when real wages decline, and less evident when real wages are not affected. Our paper points to considerable political after-effects of unexpected inflation.

Keywords: Inflation (search for similar items in EconPapers)
JEL-codes: D72 E31 N10 N40 (search for similar items in EconPapers)
Date: 2024-12
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