The Effect of Austerity Packages on Government Popularity During the Great Recession

Abel Bojar,Björn Bremer,Chendi Wang,Hanspeter Kriesi

doi:10.1017/s0007123420000472

Abstract

AbstractDuring the Great Recession, governments across the continent implemented austerity policies. A large literature claims that such policies are surprisingly popular and have few electoral costs. This article revisits this question by studying the popularity of governments during the economic crisis. The authors assemble a pooled time-series data set for monthly support for ruling parties from fifteen European countries and treat austerity packages as intervention variables to the underlying popularity series. Using time-series analysis, this permits the careful tracking of the impact of austerity packages over time. The main empirical contributions are twofold. First, the study shows that, on average, austerity packages hurt incumbent parties in opinion polls. Secondly, it demonstrates that the magnitude of this electoral punishment is contingent on the economic and political context: in instances of rising unemployment, the involvement of external creditors and high protest intensity, the cumulative impact of austerity on government popularity becomes considerable.

Highlights

The economic voting literature explains the voting behavior or the ups and downs of government popularity – the Vote-Popularity function – using both objective and subjective economic indicators
As European Union (EU) countries are experiencing another severe recession as a result of the COVID-19 pandemic, it is important to take stock of the political aftermath of the financial crisis and the eurozone crisis
We made an important contribution to this effort by conducting a systematic statistical analysis of the electoral impact of some of the most contentious economic policy decisions that governments have taken to address the fiscal imbalances resulting from the twin crises

Summary

Introduction

The economic voting literature explains the voting behavior or the ups and downs of government popularity – the Vote-Popularity function – using both objective and subjective economic indicators. A growing literature on economic voting in the Great Recession confirms this hypothesis: incumbents have been severely punished in the polls due to the depth of the recession (for example, Bartels 2014; Bellucci 2014; Bremer, Hutter and Kriesi 2020; Hernández and Kriesi 2016; Magalhaes 2014) These studies have typically focused on election outcomes. In a severe economic crisis such as the Great Recession, economic policy debates and decisions are expected to become more salient and less ambiguous – and to directly affect vote intentions from their first mention in the news.1 This focus on policy decisions is all the more important during economic crises because in such circumstances macro-economic aggregates may not be the main reference point for voters when they assign responsibility to incumbents (for example, Bellucci 2014; Clarke and Whitten 2013).. This allows us to use time-series analysis to estimate the impact of austerity packages on government popularity by treating them as intervention variables to the underlying popularity series

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Conclusion