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Voter Responses to Fiscal Crisis: New Evidence on Preferences for Fiscal Adjustment in Emerging Markets

Author

Listed:
  • Ardanaz, Martín
  • Hübscher, Evelyne
  • Keefer, Philip
  • Sattler, Thomas

Abstract

Though governments regularly implement fiscal adjustments to avert crisis, voter attitudes toward competing adjustment strategies are still poorly understood. A conjoint experiment with 8,000 survey respondents in Brazil, Colombia, Costa Rica, and Peru confirms that individuals prefer spending- to tax-based adjustments in general. However, preferences change dramatically depending on which specific tax and spending adjustments are included and on individuals' personal characteristics. Consistent with their broad preferences for spending- over tax-based adjustments, respondents oppose increases in the personal income tax and support public employment cuts. However, they support or are indifferent towards higher corporate income or value-added taxes and they oppose cuts in social assistance. Preferences for fiscal adjustment also depend on voter characteristics that are unrelated to their pecuniary interests. Ideology, social beliefs, and trust in government significantly influence their preferences for tax- or spending-based adjustments in general and for the specific composition of those adjustments.

Suggested Citation

  • Ardanaz, Martín & Hübscher, Evelyne & Keefer, Philip & Sattler, Thomas, 2024. "Voter Responses to Fiscal Crisis: New Evidence on Preferences for Fiscal Adjustment in Emerging Markets," IDB Publications (Working Papers) 13473, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:13473
    DOI: http://dx.doi.org/10.18235/0012884
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    More about this item

    Keywords

    Fiscal Adjustment; taxes; public expenditures; conjoint experiment;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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