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Trust in national institutions and macroeconomic conditions

Author

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  • Giorgio Liotti
  • Marco Musella

Abstract

One of most important effects of the recent economic crisis has been the decline of citizens?trust in political institutions. This effect was due to the inability of national governments and Parliaments to counteract the consequences of the reces sion. The lack of trust in institutions involves costs that cannot be underestimated. Therefore, for this reason, it is very important to study the relationship between changes in macroeconomic conditions and changes in the level of citizens?appreciation in national institutions. The aim of the paper is to analyse as changes in macroeconomic conditions (in particular, changes in inflation, unemployment and income inequality) have affected the level of citizens?trust in national institutions of European countries in the period 2001-20013. Using panel data method, empirical results show that the increases in unemployment and income inequality contribute to reduce the level of trust in national institutions while, as regards inflation, the results are ambiguous.

Suggested Citation

  • Giorgio Liotti & Marco Musella, 2015. "Trust in national institutions and macroeconomic conditions," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2015(115), pages 100-116.
    • Handle: RePEc:fan:steste:v:html10.3280/ste2015-115004
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    More about this item

    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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