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

Jacopo Ponticelli; Hans Joachim Voth

doi:10.1016/j.jce.2019.09.007

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

Jacopo Ponticelli^*, Hans Joachim Voth

^*Corresponding author for this work

Finance

Research output: Contribution to journal › Article › peer-review

36 Scopus citations

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)
Pages (from-to)	1-19
Number of pages	19
Journal	Journal of Comparative Economics
Volume	48
Issue number	1
DOIs	https://doi.org/10.1016/j.jce.2019.09.007
State	Published - Mar 2020

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/j.jce.2019.09.007

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

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{\textquoteright} past fiscal policies.",

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AB - 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.

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

Abstract

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