Does Fiscal Austerity Affect Public Opinion?

41 Pages Posted: 2 Apr 2015

See all articles by Anna Kalbhenn

Anna Kalbhenn

European Central Bank (ECB)

Livio Stracca

European Central Bank (ECB)

Date Written: April 1, 2015

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.

Keywords: fiscal consolidation, primary balance, public opinion, trust, euroscepticism

JEL Classification: H2, H3, H5, H6

Suggested Citation

Kalbhenn, Anna and Stracca, Livio, Does Fiscal Austerity Affect Public Opinion? (April 1, 2015). ECB Working Paper No. 1774. Available at SSRN: https://ssrn.com/abstract=2588434

Anna Kalbhenn (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Livio Stracca

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
0049 69 13440 (Phone)
0044 69 1344 6000 (Fax)

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