The Political Consequences of Economic Shocks: Evidence from Poland

press release:

Using original survey data collected just prior to the 2015 Polish parliamentary elections and comparing current with past foreign exchange borrowers, Mark Copelovitch will show how economic shocks influence domestic politics.

A surprise revaluation of the Swiss franc in early 2015 provides the backdrop for identifying Polish citizens most directly exposed to the shock - those repaying mortgages dominated in Swiss francs. Copelovitch and his colleague at the University of Zurich also found that these people were much more likely to demand government support.

Current borrowers' preferences for a generous resolution scheme translated into distinct voting behavior. Among former government voters, Swiss franc borrowers were more likely to desert the government and vote for the largest opposition party, PiS, which had promised the most generous bailout plan.

The evidence suggests that PiS was able to use the franc shock to expand its electoral coalition beyond its core voters to include those directly affected by the franc shock, a subgroup otherwise unlikely to support PiS. Simulation results indicate that absent the franc shock, PiS is unlikely to have won a parliamentary majority.

Mark Copelovitch, PhD, associate orofessor, La Follette School of Public Affairs and Department of Political Science, University of Wisconsin-Madison

Copelovitch, who joined UW-Madison in 2006, received financial support for this project from a 2017 Vilas Associates Award. His research focuses on global financial governance, exchange rates and monetary institutions, the effects of global capital flows on national economic policies, and theories of international cooperation.

Copelovitch is the author of The International Monetary Fund in the Global Economy: Banks, Bonds, and Bailouts, and an affiliate of UW-Madison's Center for European Studies, Center for German and European Studies, and Jean Monnet European Union Centre of Excellence.