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Tuesday, August 09, 2011

Austerity and Anarchy

Via Kevin O'Rourke at The Irish Economy:

Austerity and Anarchy: Budget Cuts and Social Unrest in Europe, 1919-2009, by Jacopo Ponticelli and Hans-Joachim Voth, Discussion Paper No. 8513, August 2011, Centre for Economic Policy Research: Abstract Does fiscal consolidation lead to social unrest? From the end of the Weimar Republic in Germany in the 1930s to anti-government demonstrations in Greece in 2010-11, austerity has tended to go hand in hand with politically
motivated violence and social instability. In this paper, we assemble cross-country evidence for the period 1919 to the present, and examine the extent to which societies become unstable after budget cuts. The results show a clear positive correlation between fiscal retrenchment and instability. We test if the relationship simply reflects economic downturns, and conclude that this is not the key factor. We also analyze interactions with various economic and political variables. While autocracies and democracies show a broadly similar responses to budget cuts, countries with more constraints on the executive are less likely to see unrest as a result of austerity measures. Growing media penetration does not lead to a stronger effect of cut-backs on the level of unrest.

    Posted by on Tuesday, August 9, 2011 at 04:32 PM in Academic Papers, Economics | Permalink  Comments (27)


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