Polarization and Government Debt

Research output: Working paperDiscussion paper

Abstract

When voters discount the future there is pressure on governments to increase debt. Governments are more able to resist this temptation if voters are polarized ideologically. Policy contrasts starkly with models of 'strategic debt' wherein debt is predicted to increase with polarization. Using time-varying polarization measures generated from ideology data from party manifestos we find a sizable and statistically significant negative association between ideological polarization and debt levels in OECD countries.
Original languageEnglish
Place of PublicationYork
PublisherDepartment of Economics and Related Studies, University of York
Number of pages41
Volume14
Publication statusPublished - 1 Jul 2014

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