Democracy and Fiscal-policy Responses to COVID-19

21 Pages Posted: 15 Jul 2021

See all articles by Ceyhun Elgin

Ceyhun Elgin

Bogazici University

Abdullah Yalaman

Eskisehir Osmangazi University, Centre for Applied Macroeconomic Analysis, ANU

Sezer Yasar

TED University

Date Written: July 9, 2021

Abstract

In this paper, we investigate the relationship between the level of democracy and fiscal-policy response to the economic crisis induced by the COVID-19 pandemic. We use a novel cross-country dataset of fiscal-policy responses with time variation. Our results suggest that more democratic countries adopted substantially larger fiscal-policy packages (in % GDP) and the gap regarding the size of packages between more democratic and less democratic countries widened over time. Moreover, our regressions with different measures of democracy as well as instrumental variable estimations support a robust and causal relationship between a higher level of democracy and a larger fiscal-package size.

Keywords: COVID-19, Democracy, Fiscal Policy, Pandemic

JEL Classification: D72, H12, H30, H59

Suggested Citation

Elgin, Ceyhun and Yalaman, Abdullah and Yasar, Sezer, Democracy and Fiscal-policy Responses to COVID-19 (July 9, 2021). CAMA Working Paper No. 62/2021, Available at SSRN: https://ssrn.com/abstract=3883053 or http://dx.doi.org/10.2139/ssrn.3883053

Ceyhun Elgin

Bogazici University ( email )

Bebek, İstanbul 34342
Turkey

Abdullah Yalaman (Contact Author)

Eskisehir Osmangazi University, Centre for Applied Macroeconomic Analysis, ANU ( email )

Meselik Kampusu
Atatürk Bulv.
Osmangazi, Eskisehir 24680
Turkey

Sezer Yasar

TED University ( email )

Ziya Gokalp Bulvari No: 48
Kolej Çankaya, Ankara 06420
Turkey

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