Politics in the Slump: Polarization and Extremism after Financial Crises, 1870-2014 | E-Axes
 

Search
Login
Username:
Password:
Not a member yet? Click here.
Forgot your Password?
Archives - Categories
Home
On Inequality
On the Eurozone Debt Crisis
On Monetary Policy and Central Banking
On Global Economic Growth
On the Greek Debt Crisis
On the Banking and Financial Sectors
On Brexit
On China
On India
On Global Inflation
On Currencies
On the US Debt
On the "Economics" of the Arab Spring
Blogs
Working Papers
Books
Books suggested by members



Politics in the Slump: Polarization and Extremism after Financial Crises, 1870-2014

date Date: September 23, 2015
date Author(s): Manuel Funke, Moritz Schularick, Christoph Trebesch
date Affiliation: Free University of Berlin - University of Bonn - University of Munich
Abstract

Partisan conflict and policy uncertainty are frequently invoked as factors contributing to slow post-crisis recoveries. Recent events in Europe provide ample evidence that the political aftershocks of financial crises can be severe. In this paper we study the political fall-out from systemic financial crises over the past 140 years. We construct a new long-run dataset covering 20 advanced economies and more than 800 general elections. Our key finding is that policy uncertainty rises strongly after financial crises as government majorities shrink and polarization rises. After a crisis, voters seem to be particularly attracted to the political rhetoric of the extreme right, which often attributes blame to minorities or foreigners. On average, extreme right-wing parties increase their vote share by 30% after a financial crisis. Importantly, we do not observe similar political dynamics in normal recessions or after severe macroeconomic shocks that are not financial in nature


© 2011–2017 e-axes. All rights reserved. | Credits | Contact Us | Privacy Statement | Sun 21 Jan, 2018 14:16:14 PM
e-axes is proudly powered by Norder - Creative Solutions