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Polarization and Government Debt

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  • Mickael Melki
  • Andrew Pickering

Abstract

When voters discount the future there is pressure on governments to increase debt. Governments are more able to resist this temptation if voters are polarized ideologically. Policy contrasts starkly with models of ‘strategic debt’ wherein debt is predicted to increase with polarization. Using time-varying polarization measures generated from ideology data from party manifestos we …find a sizable and statistically significant negative association between ideological polarization and debt levels in OECD countries.

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  • Mickael Melki & Andrew Pickering, 2014. "Polarization and Government Debt," Discussion Papers 14/10, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:14/10
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    Cited by:

    1. Insook Lee, 2022. "Does Political Polarization Lead to a Rise in Government Debt?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 241(2), pages 3-25, June.

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    More about this item

    Keywords

    Public Debt; Ideological Polarization;

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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