Working Paper: NBER ID: w24187
Authors: Nathan Nunn; Nancy Qian; Jaya Wen
Abstract: We use a six-decade long annual country-level panel dataset to document that recessions are more likely to cause political turnover in countries with lower levels of generalized trust. The effect is only present in democracies (not autocracies), for turnovers occurring through regular procedures (not coups), and during scheduled election years. We find similar effects for vote shares in national elections across sub-national regions within Europe and across counties within the United States. Furthermore, countries with higher trust experience more rapid recoveries from recessions. The results show that trust is an important determinant of political stability during recessions.
Keywords: trust; political turnover; economic crises; democracy
JEL Codes: D72; P16; P51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower levels of generalized trust (Z13) | higher likelihood of political turnover during recessions (D72) |
| higher levels of generalized trust (Z13) | lower likelihood of political turnover during recessions (D72) |
| recession (E32) | higher likelihood of political turnover in low-trust countries (D73) |
| trust (G21) | effect of recessions on political turnover (D72) |
| electoral accountability (D72) | interaction effect is significant in democracies (D72) |
| electoral processes (K16) | relationship between trust and turnover is significant (J63) |