Felix Hörisch, Peter Obert
Fiscal Consolidation and Social Capital: Old and New Democracies Compared

Annual Meeting of the Midwest Political Science Association (MPSA), Chicago, Ill., April 03rd to April 06th, 2014

A severe economic downturn as a sudden event is often associated with a wide array of non-economic outcomes related to political and societal developments. With special attention to the 2008-2010 financial crisis we therefore ask, what influence policies of fiscal austerity exert on macro-level social capital in the context of different political-institutional and economic arrangements. In general, we expect the impact of fiscal consolidation measures on social capital to be associated especially with their relative size. Further, we hypothesize that pronounced fiscal consolidation measures might have a positive impact both, due to their effect as economic stabilizers in times of crisis and by virtues of constituting one major characteristic of government performance. Recent research has expanded on the societal impacts of economic and fiscal development; the claim that an expansive fiscal policy may be beneficial for social capital generation has, however, yet to be validated from a cross-country perspective. We will illustrate our approach by comparing 29 OECD countries before and after the 2008-2010 crisis. Using qualitative comparative analysis as a methodological approach allows us to identify multiple connections between the economic crisis, fiscal policy responses and the development of social capital.