Politics and economics

Mario Blejer, Piroska Nagy-Mohacsi, 22 November 2017

Global politics of late has been marked by the rise of anti-elite political movements and anti-establishment leaders. This column analyses the tactics of such populists through the lens of the ‘time inconsistency’ problem – that what is considered a long-term optimal policy today may not be optimal when that future arrives. Populist leaders seek to gain and increase their power by undermining democratic institutions and conventional commitment devices. Several ‘second generation’ institutional commitment devices to counter this are proposed.

Roel Beetsma, Ward Romp, Ron van Maurik, 13 November 2017

Population ageing means that many current pension regimes are unsustainable, but the timing of pension reform measures is a political as well as an economic decision. This column uses new data on OECD pension reforms since 1970 to show that their timing has not been driven by projected demographic developments or political change, but by the state of the economy at the time when reforms were legislated. Pension systems have expanded more frequently during booms, and have contracted during economic downturns.

Gylfi Zoega, 03 November 2017

The vote for Brexit and the election of Trump are just two examples of the recent rise in populism. This column discusses how support for populist parties in Europe is closely correlated with a lack of trust in national parliaments and in the European Parliament. The EU must convince voters that it is acting in their interests and taking their concerns into account. At the same time, a distinction has to be made between decisions that should be taken at the EU level and those that are better left in the hands of the member states.

Oscar Barrera, Sergei Guriev, Emeric Henry, Ekaterina Zhuravskaya, 02 November 2017

‘Fake news’ has become a key ingredient of Western political discourse. This column uses an experiment conducted during the 2017 French presidential election campaign to show that ‘alternative facts’ are highly persuasive. Voters exposed to a narrative based on misleading numbers shifted towards the populist’s agenda, and fact checking did nothing to undo these effects. In fact, exposing voters only to official facts on a highly sensitive subject, such as the European refugee crisis, can backfire by increasing support for the extreme right.

Barry Eichengreen, Michael Haines, Matthew Jaremski, David Leblang, 25 October 2017

The 1896 US presidential election has acquired new resonance in light of the recent up-surge in populism. This column combines voting results with economic, financial, and demographic data from the 1890s to offer a systematic empirical study of voting patterns in the election. The results confirm a role for identity politics, but also a role for economic factors. They also suggest, however, that a small or even moderate change in economic conditions would not have altered the outcome of the 1896 election, nor the subsequent course of American history.  

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