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Mad about Austerity? The Effect of Fiscal Consolidation on Public Opinion
Author(s) -
KALBHENN ANNA,
STRACCA LIVIO
Publication year - 2020
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/jmcb.12687
Subject(s) - austerity , public opinion , popularity , consolidation (business) , european union , political science , economic policy , economics , consumer confidence index , fiscal union , fiscal policy , politics , keynesian economics , law , accounting
We explore the impact of fiscal austerity on three different dimensions of public opinion in 26 European Union countries (consumer confidence, attitude toward national authorities, and European institutions) on annual data between 1997 and 2017. Our main finding is that the independent effect of a tighter fiscal stance on public opinion is not large and, when present, seems to closely follow the impact of fiscal austerity on economic activity. Our results therefore are inconsistent with the view that fiscal austerity necessarily implies a negative effect on public opinion and a decline in popularity of national and European institutions.