Working Paper: CEPR ID: DP17332
Authors: Luigi Guiso; Massimo Morelli; Tommaso Sonno; Helios Herrera
Abstract: This paper identifies a specific channel through which the financial crisis has fostered populism. The financial crisis has extended economic insecurity also to segments of the population untouched by the globalization and immigration shocks. To establish causality, we use a pseudo-panel analysis and instrument the economic insecurity of different cohorts leveraging on a new methodology designed to highlight the different sensitivity to financial constraints for people in different occupations. On the supply side, we trace from manifestos the policy positions of old and new parties, showing that the supply of populism had the largest jump right after the financial crisis.
Keywords: demand and supply of populism; financial crisis; fiscal space; age-earning profiles
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic insecurity (F52) | voter turnout (K16) |
| economic insecurity (F52) | likelihood of voting for populist parties (D72) |
| economic insecurity (F52) | trust in political parties (D72) |
| economic insecurity (F52) | political behavior (D72) |