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.
Original language | English (US) |
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Pages (from-to) | 1-19 |
Number of pages | 19 |
Journal | Journal of Comparative Economics |
Volume | 48 |
Issue number | 1 |
DOIs | |
State | Published - Mar 2020 |
ASJC Scopus subject areas
- Economics and Econometrics