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dc.titleWhy Do Voters Support Procyclical Fiscal Policies? Experimental Evidence from Latin America
dc.contributor.authorArdanaz, Martín
dc.contributor.authorHübscher, Evelyne
dc.contributor.authorKeefer, Philip
dc.contributor.authorSattler, Thomas
dc.contributor.orgunitFiscal Management Division
dc.contributor.orgunitInstitutions for Development Sector
dc.coverageLatin America
dc.date.available2023-04-04T00:04:00
dc.date.issue2023-04-04T00:04:00
dc.description.abstractGovernments often pursue procyclical fiscal policies, even though they reduce voter welfare. Is this because voters actually prefer procyclical policies? The analysis in this paper exploits the first individual-level evidence from an original survey of 12,000 respondents in 8 countries across Latin America. Prior research links support for procyclical policy to imperfect voter information but does not explore voter knowledge of the composition of public spending increases and cuts in response to positive and negative shocks. We present experimental evidence that less informed individuals are more supportive of procyclical policy. Previous work also explores how trust in politicians influences fiscal policy preferences. We find that those who distrust politicians support acyclical fiscal policies: they are skeptical that they will benefit from higher government spending after positive shocks and be spared the costs of spending cuts after negative shocks. Finally, the evidence supports untested assumptions about voter patience and risk aversion. Patient respondents care more about the future costs of procyclical policy and risk-averse respondents about its higher volatility; support for acyclical policy is correspondingly higher among both groups.
dc.format.extent52
dc.identifier.doihttp://dx.doi.org/10.18235/0004817
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Why-Do-Voters-Support-Procyclical-Fiscal-Policies-Experimental-Evidence-from-Latin-America.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectTrust
dc.subjectVoting Behavior
dc.subjectFiscal Policy
dc.subjectPublic Expenditure
dc.subjectLabor
dc.subjectFiscal Procyclicality
dc.subjectSaving
dc.subjectEconomy
dc.subjectTaxation
dc.subjectPublic Employment
dc.subject.jelcodeD72 - Political Processes: Rent-Seeking, Lobbying, Elections, Legislatures, and Voting Behavior
dc.subject.jelcodeD82 - Asymmetric and Private Information • Mechanism Design
dc.subject.jelcodeE02 - Institutions and the Macroeconomy
dc.subject.jelcodeE62 - Fiscal Policy
dc.subject.keywordsasymmetric information;Trust;patience;riskaversion;procyclical fiscal policy
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01455
idb.operationRG-E1745
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