Consolidation nations: Public attitudes, electoral institutions, and fiscal rules in the European Union

Abstract

We know relatively little about democratic responsiveness on fiscal policy, an area in which both bond markets and European Union (EU) rules constrain European governments' freedom of action. Has their adoption of fiscal responsibility laws (FRLs)—a politically appealing mechanism to restrain deficit spending—in recent decades been the result of their heeding public opinion or ignoring it? Our analysis finds a mixed picture: the strengthening of FRLs generally occurred in the presence of public support for debt reduction, but this public opinion effect is stronger in countries with more majoritarian electoral systems than those with more proportional systems. And although elections induce attentiveness to public attitudes, election proximity did not have a meaningful effect on governments' responsiveness to the public's fiscal preferences. Our explanation for this finding emphasizes the durability of support for debt reduction and political parties' greater sensitivity to median voter positions in more majoritarian electoral systems. These findings deepen our understanding of both austerity politics and democratic performance in Europe, affirming a degree of responsiveness that would be tested in the event of a future debt crisis.