Working Paper: NBER ID: w23599
Authors: Jess Fernández-Villaverde; Tano Santos
Abstract: This paper argues that institutions and political party systems are simultaneously determined. A large change to the institutional framework, such as the creation of the euro by a group of European countries, will realign – after a transition period – the party system as well. The new political landscape may not be compatible with the institutions that triggered it. To illustrate this point, we study the case of the euro and how the party system has evolved in Southern and Northern European countries in response to it.
Keywords: No keywords provided
JEL Codes: D72; F30; F40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| introduction of the euro (F36) | realignment of party systems in southern Europe (P39) |
| introduction of the euro (F36) | realignment of party systems in northern Europe (F55) |
| realignment of party systems in southern Europe (P39) | emergence of new left-wing populist parties (P39) |
| realignment of party systems in southern Europe (P39) | fracturing of traditional coalitions (D74) |
| differing interests between older voters and younger voters (D72) | rise in radical left parties (P27) |
| introduction of the euro (F36) | increased volatility in political alignments (D72) |
| introduction of the euro (F36) | shifts in party dynamics (D72) |
| realignment of party systems in northern Europe (F55) | fracturing of traditional coalitions (D74) |