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The Financial Drivers of Populism in Europe

Author

Listed:
  • Guiso, Luigi
  • Morelli, Massimo
  • Sonno, Tommaso
  • Herrera, Helios

Abstract

This paper identifies a specific channel through which the financial crisis has fostered populism. The financial crisis has extended economic insecurity also to segments of the population untouched by the globalization and immigration shocks. To establish causality, we use a pseudo-panel analysis and instrument the economic insecurity of different cohorts leveraging on a new methodology designed to highlight the different sensitivity to financial constraints for people in different occupations. On the supply side, we trace from manifestos the policy positions of old and new parties, showing that the supply of populism had the largest jump right after the financial crisis.

Suggested Citation

  • Guiso, Luigi & Morelli, Massimo & Sonno, Tommaso & Herrera, Helios, 2022. "The Financial Drivers of Populism in Europe," CEPR Discussion Papers 17332, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:17332
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Luca Bellodi & Massimo Morelli & Matia Vannoni, 2021. "A Costly Commitment: Populism, Government Performance, and the Quality of Bureaucracy," CESifo Working Paper Series 9470, CESifo.
    2. Gavresi, Despina & Litina, Anastasia, 2023. "Past exposure to macroeconomic shocks and populist attitudes in Europe," Journal of Comparative Economics, Elsevier, vol. 51(3), pages 989-1010.
    3. Piergiuseppe Fortunato & Tanmay Singh & Marco Pecoraro, 2024. "From Rhetoric to Reality: How Ideology, History and Geography shape Populism's Economic Footprint," IRENE Working Papers 24-02, IRENE Institute of Economic Research.
    4. Massimo Morelli & Antonio Nicolò & Paolo Roberti, 2021. "A Commitment Theory of Populism," CESifo Working Paper Series 9473, CESifo.
    5. Bordignon, Massimo & Franzoni, Federico & Gamalerio, Matteo, 2024. "Is Populism reversible? Evidence from Italian local elections during the pandemic," European Journal of Political Economy, Elsevier, vol. 81(C).
    6. Despina Gavresi & Anastasia Litina, 2024. "Population Aging and the Rise of Populism in Europe," Discussion Paper Series 2024_07, Department of Economics, University of Macedonia, revised Jun 2024.
    7. Massimo Bordignon & Federico Franzoni & Matteo Gamalerio, 2023. "Is Populism reversible? Evidence from Italian local elections during the pandemic," DISCE - Working Papers del Dipartimento di Economia e Finanza def124, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    8. Luca Bellodi & Massimo Morelli & Antonio Nicolò & Paolo Roberti, 2023. "The Shift to Commitment Politics and Populism:Theory and Evidence," BAFFI CAREFIN Working Papers 23204, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    9. Despina Gavresi & Andreas Irmen & Anastasia Litina, 2023. "Population Aging and the Rise of Populist Attitudes in Europe," DEM Discussion Paper Series 23-10, Department of Economics at the University of Luxembourg.

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    More about this item

    Keywords

    Demand and supply of populism; Financial crisis; Fiscal space; Age-earning profiles;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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