How to Design Politically Sustainable Responses to Fiscal Pressure

What are the best political and institutional responses in case of fiscal crisis?

Project Summary

How can the International Monetary Fund (IMF) help governments manage political challenges conjured by austerity measures? To answer this question, we have to know how voters feel about austerity measures and where they draw the line. The findings could help International Organizations like the IMF assist governments in finding better and more sustainable political solutions to debt crises, by keeping voters content.

The main research questions are:

– How do voters respond to fiscal adjustments?

– Can the IMF and the EU help stabilize governments during fiscal pressure?

– Does a scapegoat strategy often used by national governments undermine the EU’s and the IMF’s  credibility amongst voters?

Based on a weighted voter response function (comprising aversion to personal income loss, provision of public goods and overall macroeconomic stability increase) the project tests two hypotheses; one, if voters oppose fiscal adjustments more, the greater the reduction in public goods provision and the greater the loss of personal income and second; two, if voters oppose adjustments less, the larger the fiscal deficit is.

Studies will be performed in five countries which have undergone similar fiscal adjustments, with different results in terms of political instability.

The aim of such an analysis is to help with the development of politically sustainable solutions in case of debt crises, bringing them in greater accordance with political accountability than the currently existing ones. 

Research Team

Evelyne Hübscher
Coordinator
University of Geneva

Jan-Egbert Sturm
Co-Coordinator
Eidgenössische Technische Hochschule, Zurich

Thomas Sattler
Co-Coordinator
University of Geneva

Markus Wagner
Principal Member
University of Vienna

Status

ongoing

Disciplines

Themes

Regions

Countries

Estonia, Greece, Ireland, Spain, United Kingdom

Host Institution

Coordinator

Year