Fiscal Policy in Comparative Political Economy

In modern developed democracies, the state plays an extremely important role in the economy. Between a third and one half of GDP flows through public coffers every year. How the public finances are organized, how public revenue is generated, and what it is spent for does thus have an enormous influence on the development of the economy and of society more broadly.

Recognizing this fundamental importance of fiscal policy, Schumpeter famously argued already in 1918: “The public finances are one of the best starting points for the investigation of society. This is true both of the causal importance of fiscal policy (insofar as fiscal events are an important element in the causation of all change) and of the symptomatic significance (insofar as everything that happens has its fiscal reflection).”

Nevertheless, fiscal policy has generated surprisingly little attention in the field of comparative political economy. And where it is analyzed, these studies—contra Schumpeter—almost always treat fiscal policy as their dependent variable and investigate the fiscal effects of certain political arrangements.

My research starts from this observation and assigns a more central role to fiscal policy, taking it as a starting point instead of relegating it to a background condition. It is motivated by the fact that fiscal policy is not a specific policy area like health policy or defense policy, but a cross-cutting issue that affects all policy fields. Therefore, my research analyzes how fiscal considerations can affect both the politics and the policies of other policy areas. In this, it treats the public finances not just as a constraint on political decision-making or the result of the interplay of institutions and politics but rather as an independent causal factor in shaping them and as a driver of political change.


Current Projects

Between Distribution and Allocation: Growth Models, Sectoral Coalitions and the Politics of Taxation Revisited (with Daniel Mertens)
The comparative political economy of taxation is predominantly analyzed as a matter of distribution. This focus has generated many valuable insights but has also come with a lack of attention towards allocational matters. This paper develops an allocational approach towards tax policy choices: As taxes channel resources into some economic activities and restrain others, they become subject to the allocational concerns of consumers and producers, i.e. of different sectors of the economy. We argue that sectoral coalitions straddling the class divide have a substantial influence on the development of tax systems. Since differences in tax systems are closely linked to differences in growth regimes, how producer groups shape the allocational politics of taxation is pivotal to our understanding of capitalist diversity. Two case studies of tax politics and reform in the United States and Germany illustrate our theory. We show how a cross-class coalition centered on the domestic sector dominated political struggles about the Value Added Tax, whereas the export sector prevailed in the corresponding debates in Germany. This example thus underlines the need to incorporate public finance in theorizing the political underpinnings of contemporary capitalism.

Does fiscal pressure constrain democratic representation? Evidence from Germany (with Lea Elsässer)

How does politics in the age of permanent austerity differ from politics in fiscally more permissive times? Many authors fear that a fiscally constrained state is also a less democratic state. In this paper, we study this question from the perspective of political responsiveness and ask how responsiveness is connected to fiscal pressure. We hypothesize that the rise of “permanent austerity” has contributed to a systematic but unequal decline of responsiveness. Using a unique dataset containing public opinion data on more than 1000 policy proposals in Germany between 1980 and 2015, we investigate whether policymakers are more responsive on issues without fiscal consequences than on issues that affect the public budget. We find that responsiveness varies systematically with the degree of fiscal pressure and that policymakers are less responsive on fiscal issues than on non-fiscal issues, in particular when fiscal pressure is high.


‘Nothing’ is not a Control Group. On the Need for Placebo Comparisons in Survey Experiments (with Raphael Reinke and Tobias Rommel)

Many survey experiments in political science compare the responses of a treated group to the responses of a supposedly untreated control group. In designing such experiments, researchers pay a lot of attention to the design of the treatment but often focus much less on the design of their control group. We argue that this practice is likely to produce false positives because a control group that does not receive any treatment is a weak standard for comparison. Instead, it is necessary to compare the treated group to a placebo control group that exactly replicates all confounding components of the original treatment and only differs by not including the theoretically specified mechanism. By reviewing four framing experiments, we demonstrate how the inclusion of proper placebo treatments improves the validity of the inferences we draw, discuss criteria for the successful design of a placebo, and show a way to check the validity of the placebo manipulation.

The Symmetric Fallacy. The Dangers of Symmetric Reasoning in the Social Sciences (with Timur Ergen)

Social scientists often treat causal relationships as inherently symmetric: If an increase in X leady to an increase in Y, a decline in X will lead to a corresponding decline in Y. This paper challenges this conventional approach and argues that many causal relationships are in fact asymmetric. While researchers are in principle aware of this, it is often not reflected in research practice. Therefore, we call in social scientists to pay more attention to the possibility of asymmetric relationships in their research. They otherwise run the risk of accidentally rejecting sound theories or of accepting faulty ones. We develop a typology of different mechanisms generating asymmetry, demonstrate their empirical relevance by replicating empirical studies from political science, discuss strategies to deal with asymmetry, and show the relevance of asymmetry for political analysis and reform.

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