Trust in national institutions and macroeconomic conditions

Abstract

One of most important effects of the recent economic crisis has been the decline of citizens’trust in political institutions. This effect was due to the inability of national governments and Parliaments to counteract the consequences of the reces sion. The lack of trust in institutions involves costs that cannot be underestimated. Therefore, for this reason, it is very important to study the relationship between changes in macroeconomic conditions and changes in the level of citizens’appreciation in national institutions. The aim of the paper is to analyse as changes in macroeconomic conditions (in particular, changes in inflation, unemployment and income inequality) have affected the level of citizens’trust in national institutions of European countries in the period 2001-20013. Using panel data method, empirical results show that the increases in unemployment and income inequality contribute to reduce the level of trust in national institutions while, as regards inflation, the results are ambiguous.