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


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.

Misremembering Weimar: Hyperinflation, the Great Depression, and German Collective Memory (with Nils Redeker and Tobias Rommel)

Why is German collective economic memory so obsessed with hyperinflation but largely ignores the Great Depression? We argue that this is because many Germans think that both events are one and the same. They conceive of Weimar economic history as being characterized by one big economic crisis, which encompasses both hyperinflation and mass unemployment. Using original survey data, we show that about half of all Germans believe that the Great Depression was characterized by high inflation rates, whereas only less than 5% believe that it was characterized by deflation. More educated Germans are more likely to commit this fallacy. Comparing the German survey with a Dutch survey, we show that this confusion is unique to Germany, even if historical memory of the Great Depression in the Netherlands is also rather imprecise.

Prussia, Political Catholicism and the Success of the Alternative für Deutschland
What explains the regionally differentiated success of right-wing authoritarian parties in otherwise relatively homogenous political systems? This paper argues that a historical experience with authoritarian suppression can immunize voters against the authoritarian temptation when this experience is historically transmitted through persistent forms of political mobilization. It studies how the suppression of German Catholics in the 19th century Kulturkampf triggered a regionally differentiated mobilization of political Catholicism that still affects political support for the radical right Alternative für Deutschland (AfD) today. Analyzing electoral outcomes at the municipal level, it shows that Catholic regions in which suppression was intense show much lower support for the AfD than Catholic regions in which suppression was mild. Classical economic or socio-demographic factors cannot account for this pattern. The paper thus contributes to the literature on the historical determinants of political behavior as well as to the question which regional context effects weaken or strengthen the radical right.

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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