The Electoral Consequences of Large Fiscal Adjustments / Alberto F. Alesina, Dorian Carloni, Giampaolo Lecce.

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Alesina, Alberto F

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TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w17655.Publication details: Cambridge, Mass. National Bureau of Economic Research 2011.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: The conventional wisdom regarding the political consequences of large reductions of budget deficits is that they are very costly for the governments which implement them: they are punished by voters at the following elections. In the present paper, instead, we find no evidence that governments which quickly reduce budget deficits are systematically voted out of office in a sample of 19 OECD countries from 1975 to 2008. We also take into consideration issues of reverse causality, namely the possibility that only "strong and popular" governments can implement fiscal adjustments and thus they are not voted out of office "despite" having reduced the deficits. In the end we conclude that many governments can reduce deficits avoiding an electoral defeat.

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Previous	nber w17652 Competing on Speed /	nber w17653 Evaporating Liquidity /	nber w17654 The Expanding Social Safety Net /	nber w17655 The Electoral Consequences of Large Fiscal Adjustments /	nber w17656 The Contribution of Schooling in Development Accounting: Results from a Nonparametric Upper Bound /	nber w17657 The Best of Times, the Worst of Times: Understanding Pro-cyclical Mortality /	nber w17658 Take-Up of Public Insurance and Crowd-out of Private Insurance Under Recent CHIP Expansions to Higher Income Children /	Next

December 2011.

The conventional wisdom regarding the political consequences of large reductions of budget deficits is that they are very costly for the governments which implement them: they are punished by voters at the following elections. In the present paper, instead, we find no evidence that governments which quickly reduce budget deficits are systematically voted out of office in a sample of 19 OECD countries from 1975 to 2008. We also take into consideration issues of reverse causality, namely the possibility that only "strong and popular" governments can implement fiscal adjustments and thus they are not voted out of office "despite" having reduced the deficits. In the end we conclude that many governments can reduce deficits avoiding an electoral defeat.