Citizens often seem to choose which political party to support by seeking out information based on their party affiliation, rather than based on informed opinion. Along with the explosion in new media in the US, trust in mainstream media has been decreasing, particularly amongst Republicans. This column presents a framework to analyse how beliefs regarding the mainstream media impact individual media choice and thereby influence electoral outcomes. A substantial political advantage accrues to the side with less exposure to or trust in mainstream media. This may provide one rationale for the fomenting of this distrust by party elites.
Politics and economics
Opposition to a carbon tax was at the root of the gilets jaunes protests in France. Did the protestors think the tax wouldn’t work, or that it wasn’t fair, or that they would personally lose out? Adrien Fabre talks to Tim Phillips about the link between tax and trust in government.
Russia’s invasion of Ukraine added another one to a series of crises affecting Europe over the last decade and a half. This column finds that fragmentation of euro area financial markets has been relatively limited, as policymakers have benefitted from reforms after and experiences with past crises, European countries and authorities reacted with quite some unity, and direct financial exposures to Russia and Ukraine are relatively small. Cross-country divergences of euro area asset prices appear to have been particularly driven by bond markets and related to the countries with the greatest energy and financial exposures as well as to changes in economic uncertainty.
Analysis of large-scale conflicts over the past 30 years can shed light on the range of possible economic outcomes for Ukraine. This column shows that, in general, the impact on GDP is very large, persisting even ten years after conflict onset, and affects all sectors of the economy. This is overwhelmingly driven by declines in private consumption and official trade. In addition, large-scale conflicts often lead to persistent long-term refugee outflows to both neighbouring non-advanced economies (given the location of most conflict-affected countries) and non-neighbouring advanced economies. As such, policies to absorb refugees and facilitate post-war reconstruction need to be long-term as well.
There has been much debate over the intentions behind Russia’s March 2022 presidential decree requiring gas importers to settle gas payments in rubles. This column argues that the scheme is intended to protect the Moscow Stock Exchange from financial sanctions. The decree requires not only that gas payments are settled in rubles, but also that the rubles are obtained on the exchange, making it indispensable to the transactions. This prevents the exchange being placed under sanctions without gas supplies being cut off. This demonstrates the development of not only sanctions, but also sanction defences, that exploit interdependencies between countries.
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