The allocation of COVID-19 assistance under the American Rescue Plan has proven to be a point of significant partisan conflict between the Democratic administration and Republican governors. Motivated by partisan conflicts in the passage and implementation of the American Recovery and Reinvestment Act, this column suggests that the resolution of these disagreements will have significant consequences for the overall impact of the American Rescue Plan on the aggregate economy.

Trust is a crucial norm in any democratic system. And respect for the truth, as well as support for the institutions that uphold it, are fundamental for a functioning market economy. This column argues that recent controversies in the US, as well as the UK, have seen this norm begin to erode, and that this may have negative effects for democracies and economies worldwide. Citing evidence from Iceland, the author argues that unless reforms are implemented soon, advocates for democracy may see greater power slide into the hands of those who propagate mistruths for their own material gain.

While decades of research have investigated the reasons behind the underrepresentation of women in politics, uncovering discriminatory behaviours of voters remains a difficult task. This column examines the voting outcomes of French departmental elections in 2015, which required candidates to run in mixed-gender pairs, and isolates discriminatory behaviour of right-wing voters. Right-wing parties lost votes when the woman’s name appeared first on the ballot. However, the discriminatory effect disappears where information about the candidates is available on the ballot.

The effects of shocks to political risk can be captured by the change in the spread of sovereign credit default swaps. This column shows how the rise of populist movements in Italy following the financial crisis and sovereign debt crisis affects domestic and euro area financial markets, and also impacts the Italian real economy. Italy has been an ideal laboratory to explore and learn about the economic consequences of political risk shocks, and the instability there implies that this is likely to continue to be the case in the future.

Assessing how voters respond to public policies they like or dislike is challenging due to the absence of counterfactual scenarios. This column exploits a collective pardon of prisoners in response to prison overcrowding in Italy in 2006 to show that voters punish incumbent politicians for unpopular policies they are deemed responsible for. Regions with greater incidents of recidivism were those where incumbent politicians fared more poorly in post-pardon elections.

It is often suspected that politicians time announcements of controversial policies strategically to avoid public scrutiny. This column reports evidence from a systematic analysis of executive orders issued by US presidents, showing that their timing is consistent with strategic behaviour. Presidents tend to issue executive orders, and specifically ones that are likely to generate negative publicity, in coincidence with other important events that distract the media and the public.

There is growing concern that money has corrupted politics. This column uses data from French elections since 1993 to show that an increase in spending per voter has consistently increased a candidate’s vote share. Caps on spending may increase this impact, as marginal effects are large. The price of a vote varies widely, and is most expensive for the extreme right. 

Despite public concerns about the role and influence of big donors on politics, questions remain regarding the mechanisms behind political favouritism to donor corporations. Using 2006–2014 data on political donations and public procurement allocations in the Czech Republic, this column finds that firms that increase their donations to a political party see the value of their public procurement contracts rise in the following year. Contracting authorities appear to engage in different forms of strategic behaviour to favour corporate donors, who tend to face fewer competitors in more regulated and open procurement procedures.

Cultural values and beliefs have an impact on social and economic development, but the interplay between culture and political institutions is still not well understood. This column examines the effect of trust on political stability in democratic and non-democratic regimes, specifically in the face of severe economic downturns. It finds that democratic regimes with high levels of trust are much less likely to experience leader turnover than low-trust countries, while there is no effect among non-democracies, and that countries with higher levels of trust experience faster economic growth in the years immediately following a recession.