Working Paper: CEPR ID: DP15479
Authors: Sandra Garciauribe; Hannes Mueller; Carlos Sanz
Abstract: This article exploits two newspaper archives to track economic policy uncertainty in Spain in 1905-1945, a period of extreme political polarization. We find that the outbreak of the civil war in 1936 was anticipated by a striking upward level shift of uncertainty in both newspapers. We study the dynamics behind this shift and provide evidence of a strong empirical link between increasing uncertainty and the rise of divisive political issues at the time: socio-economic conflict, regional separatism, power of the military, and role of the church. This holds even when we exploit variation in content at the newspaper level.
Keywords: economic uncertainty; divisive politics; Spain; civil war; socioeconomic conflict
JEL Codes: N10; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic policy uncertainty (EPU) (D89) | divisive political issues (D72) |
| socioeconomic conflict (D74) | economic policy uncertainty (EPU) (D89) |
| agrarian reform law (Q15) | socioeconomic conflict (D74) |
| economic policy uncertainty (EPU) (D89) | civil conflict (D74) |
| socioeconomic conflict (D74) | civil conflict (D74) |
| political deadlock surrounding agrarian reform (P32) | economic policy uncertainty (EPU) (D89) |