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Working Paper

Inflation Surprises and Election Outcomes

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Authors

  • Federle
  • J.
  • Mohr
  • C.
  • Schularick
  • M.

Publication Date

JEL Classification

D72 E31 N40 N10

Key Words

Inflation

Economic Voting

Extremism

Populism

Radicalization

Related Topics

Political Economy

Monetary Policy

Business Cycle World

We study the political consequences of inflation surprises, focusing on votes for extremist and populist parties in 365 elections in 18 advanced economies since 1948. Inflation surprises are regularly followed by a substantial increase in vote shares of extremist, anti-system, and populist parties. An inflation surprise of 10 percentage points leads to a 15% increase in their vote share, comparable to the increase typically seen after financial crises. We show that the change in voting behavior is particularly pronounced when real wages decline, and less evident when real wages are not affected. Our paper points to considerable political after-effects of unexpected inflation.

Kiel Institute Experts

  • Prof. Dr. Cathrin Mohr
    Research Director
  • Dr. Jonathan Federle
    Kiel Institute Researcher
  • Prof. Dr. Moritz Schularick
    President

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