Economic expectations under the shadow of party polarization: Evidence from 135 government changes

B-Tier
Journal: European Economic Review
Year: 2025
Volume: 171
Issue: C

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

I study the behavior of economic expectations under political polarization. Using microdata spanning 27 countries over three decades, I follow a difference-in-differences design exploiting 135 government changes to identify the differential update of expectations along partisan lines. I then show that this difference is stronger in more polarized settings; in fact, 57% of its variation can be accounted for by the polarization of political parties. The resulting gap in supporters’ expectations cannot be rationalized as reflecting expectations about the government’s economic policy, suggesting instead that political (non-economic) conflicts contaminate economic expectations.

Technical Details

RePEc Handle
repec:eee:eecrev:v:171:y:2025:i:c:s0014292124002393
Journal Field
General
Author Count
1
Added to Database
2026-01-25