IfW in the News

Ten years after Lehman: Can liberal democracy survive another financial crisis?


Empirical study from Christoph Trebesch and Manuel Funke about the effect of financial crisis on elections.

Excerpt from the Article

(...) Yet, although most people do not realise it, the financial crisis has likely had an important role in the erosion of liberal Western democracy. Economists Manuel Funke, Moritz Schularick, and Christoph Trebesch have shown that, in advanced economies during a long period beginning in 1870, right-wing parties’ vote share increased by an average of 30 percent (not percentage points) following financial crises. This effect has been peculiar to financial crises and does not apply to recessions or macroeconomic shocks that come from outside the financial system.