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Does fiscal austerity affect public opinion?

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  • Stracca, Livio
  • Kalbhenn, Anna

Abstract

In this paper we explore the impact of fiscal austerity on three different dimensions of public opinion (overall life satisfaction and confidence, attitude towards national authorities, and European institutions). Based on a panel of 26 EU countries, we find that, overall, fiscal consolidation episodes tend to have little and inconsistent impact on our measures of public opinion once we include macro controls (real GDP growth, inflation, unemployment, and whether a country is in a EU/IMF program). Some of the circumstances under which consolidation is undertaken are significant in explaining the effect on public opinion, but also these effects are neither strong nor consistent throughout. We conclude that the effect of fiscal consolidation measures on public opinion mainly operates through their effect on the macroeconomy. JEL Classification: H2, H3, H5, H6

Suggested Citation

  • Stracca, Livio & Kalbhenn, Anna, 2015. "Does fiscal austerity affect public opinion?," Working Paper Series 1774, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20151774
    Note: 335958
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp1774.en.pdf
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    References listed on IDEAS

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    Cited by:

    1. Sarah Brown & Alexandros Kontonikas & Alberto Montagnoli & Mirko Moro & Luisanna Onnis, 2018. "Austerity, Life Satisfaction and Expectations," Working Papers 2018001, The University of Sheffield, Department of Economics.

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    More about this item

    Keywords

    Euroscepticism; Fiscal consolidation; primary balance; public opinion; trust;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H6 - Public Economics - - National Budget, Deficit, and Debt

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