In the wake of the financial crisis, most developed countries have entered a period of prolonged budgetary austerity. While the success of austerity programs is still unclear, it is also an open question what success would mean for activist government in the long run. This paper rejects the progressive belief that successful fiscal consolidation will lead to a strengthening of fiscal capacity, arguing that consolidations transform the political context in which fiscal policy is made. By analyzing the evolution of public expenditure in six countries with sustained budget surpluses, it shows that while surpluses were mostly achieved through expenditure cuts, they were predominantly used for cutting taxes. While fiscal crises abated, their collateral damage to public expenditure remained. This result is further elaborated by a case study of the Swedish budget surplus. The paper concludes that consolidations can create a specific type of fiscal regime and thus have long-term consequences for the fiscal capacity of the state. Zusammenfassung Angesichts der Schuldenprobleme in vielen entwickelten

What are the political effects of fiscal consolidations? Theoretical considerations suggest that consolidations should reduce the public’s support for their governments, but empirical studies have found surprisingly small effects on government support. However, most of these studies analyze electoral outcomes, which are separated from the consolidation by a multi-link causal chain. We argue that more direct measures of government support, such as executive approval, show much stronger negative effects of consolidation, since they are less affected by the strategic timing of consolidations or the political alternatives on offer. We analyze a time series cross-sectional dataset of executive approval in 14 Organization for Economic Co-operation and Development (OECD) countries from 1978 to 2014, using the narrative approach to measure fiscal consolidations. We find that spending cuts decrease government approval, especially during economic downturns, but tax increases’ impact on approval remains minimal. Finally, left- and right-wing governments are equally likely to lose approval after implementing austerity.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. MPIfG Discussion Papers are refereed scholarly papers of the kind that are publishable in a peer-reviewed disciplinary journal. Their objective is to contribute to the cumulative improvement of theoretical knowledge. The papers can be ordered from the institute for a small fee (hard copies) or downloaded free of charge (PDF). Terms of use: Documents in AbstractThis paper challenges the focus on budget deficits that permeates the literature on fiscal policy. It analyzes countries running budget surpluses and asks why some of them preserved these surpluses while others did not. Whereas several OECD members recorded surpluses for just a few years, balanced budgets became the norm in Australia, Canada, Denmark, Finland, New Zealand, and Sweden in the late 1990s. The paper compares the fiscal policy choices of both types of countries from a historical-institutionalist perspective. It argues that a path-dependent shift in the balance of power among fiscal policy interests explains why surpluses persisted in one group of countries but not in the other. This reconfiguration of interests was triggered by a deep fiscal crisis and an ensuing expenditure-led consolidation. It can be interpreted as creating a new "surplus regime" in which fiscal policy became structured around the goals of balancing the budget and cutting taxes. ZusammenfassungDieser Artikel hinterfragt den Fokus auf Haushaltsdefizite, der die wissenschaftliche Beschäftigung mit Fiskalpolitik prägt. Er analysiert Länder mit Haushaltsüberschüssen und untersucht, warum einige von ihnen ihre Überschüsse dauerhaft bewahrten, andere jedoch nicht. Während eine Reihe von OECD-Mitgliedern nur für wenige Jahre Über-schüsse erzielte, wurden ausgeglichene Haushalte in Australien, Dänemark, Finnland, Kanada, Neuseeland und Schweden seit Ende der 1990er-Jahre zur Norm. Der Artikel vergleicht die Fiskalpolitik beider Ländergruppen aus einer historisch-institutionalistischen Perspektive. Er argumentiert, dass pfadabhängige Machtverschiebungen zwischen verschiedenen fiskalpolitischen Interessengruppen erklären, warum Überschüsse nur in einigen Ländern bewahrt wurden. Diese Machtverschiebungen wurden von einer tiefen Fiskalkrise und einer anschließenden ausgabenseitigen Haushaltskonsolidierung ausgelöst. Diese führten zu einem neuen fiskalpolitischen "Überschussregime", in dem die Fiskalpolitik sich auf die Ziele ausgeglichener Haushalte und sinkender Steuern fokussierte.

Comparative political economists typically analyze taxation as a matter of distribution. This article, by contrast, develops an allocational explanation of tax policy choices: as taxes channel resources into some economic activities and restrain others, they become subject to the allocational concerns of different sectors of the economy. We argue that sectoral coalitions straddling the class divide substantially influence the development of tax systems, and that the power of these coalitions is associated with differences in growth models. Employing a mixed methods approach, we first demonstrate a systematic association between growth models and consumption taxation across advanced capitalist countries. Afterward, we study the German value-added tax increase in 2005 to illustrate the political dynamics behind this result. In this debate, an export sector coalition prevailed over a domestic sector coalition that strongly opposed the reform. We conclude by discussing the wider implications for the study of taxation and comparative capitalism.

Contemporary political behavior is often affected by historical legacies, but the specific mechanisms through which these legacies are transmitted are difficult to pin down. This paper argues that historical political conflicts can affect political behavior over several generations when they trigger an enduring organizational mobilization. It studies how the oppression of German Catholics in the nineteenth century led to a regionally differentiated mobilization of political Catholicism that still affects political support for the radical right Alternative für Deutschland (AfD) today. Using newly collected data on historical oppression events, it shows that Catholic regions where oppression was intense saw greater mobilization of Catholic lay organizations than Catholic regions where oppression was milder and show lower support for the AfD today. The paper thus contributes to the literature on the historical determinants of political behavior as well as to the question of which regional context effects strengthen or weaken the radical right.

No abstract

No abstract

The literature on the comparative political economy of taxation often links consumption taxation to the welfare state. It argues that the expansion of consumption taxation paid for the expansion of welfare states and that bigger welfare states therefore tax consumption more heavily. We challenge this perspective by looking at the introduction of the Value Added Tax (VAT) in the European Economic Community in 1967, the breakthrough of this form of consumption taxation. Studying the crucial case of Germany, and complementing it with the shadow case of the Netherlands, we demonstrate that political struggles about this reform did not center on a conflict between supporters and opponents of welfare state expansion. Instead, the VAT was primarily a tool to foster market integration in Europe by reducing barriers to trade. As we show, the coalition in support of the VAT only succeeded after it won the backing of important export interests.