The Political Consequences of Economic Shocks. Evidence from Poland

CIS Working Paper No.97

39 Pages Posted: 10 Feb 2018

See all articles by John Ahlquist

John Ahlquist

University of California, San Diego (UCSD)

Mark Copelovitch

University of Wisconsin-Madison

Stefanie Walter

University of Zurich - Institute for Political Science

Date Written: January 31, 2018

Abstract

How do economic shocks influence domestic politics? We take advantage of a surprise revaluation of the Swiss franc in early 2015 to identify the Polish citizens with clear and direct economic exposure: those repaying mortgages denominated in Swiss francs. Using original survey data collected just prior to the 2015 Polish parliamentary elections and comparing current with past foreign exchange borrowers, we show that individuals directly exposed to the shock were much more likely to demand government support. Those with no exposure to the shock were less likely to express an opinion on the matter. Current borrowers’ preferences for a generous resolution scheme translated into distinct voting behavior. Among former government voters, Swiss franc borrowers were more likely to desert the government and vote for the largest opposition party, the PiS, which had promised the most generous bailout plan. The evidence suggests that the PiS was able to use the franc shock to expand its electoral coalition beyond its core voters to include those directly affected by the franc shock, a subgroup otherwise unlikely to support the PiS. Simulation results indicate that, absent the franc shock, the PiS is unlikely to have won a parliamentary majority.

Keywords: political behavior, party politics, globalization, economic voting, exchange rates, Poland, elections, populism

JEL Classification: F50, F60, F31, H12

Suggested Citation

Ahlquist, John and Copelovitch, Mark and Walter, Stefanie, The Political Consequences of Economic Shocks. Evidence from Poland (January 31, 2018). CIS Working Paper No.97. Available at SSRN: https://ssrn.com/abstract=3114037 or http://dx.doi.org/10.2139/ssrn.3114037

John Ahlquist

University of California, San Diego (UCSD) ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

Mark Copelovitch

University of Wisconsin-Madison ( email )

401 North Hall, 1050 Bascom Mall
Madison, WI 53706
United States

HOME PAGE: http://markcopelovitch.com

Stefanie Walter (Contact Author)

University of Zurich - Institute for Political Science ( email )

Dep. of International Relations
Seilergraben 49
CH-8001 Zurich
Switzerland

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