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Political Consequences of Consumer Debt Relief

Toke Aidt¹; Zareh Asatryan²; Lusine Badalyan³

¹ University of Cambridge & CESifo [email protected] · ² ZEW & CESifo [email protected] · ³ Frankfurt School of Finance & Management [email protected]

Many democracies operate consumer debt relief programs. These are often implemented or adjusted during the election cycle, but their political effects are not well-understood. We investigate if debt relief can influence high-stakes elections. We utilize quasi-experimental variation generated by a very large privately-funded debt relief program enacted in the Republic of Georgia during the presidential election in 2018 that affected every sixth voter. We estimate that the program helped the incumbent candidate win that election, and that its effects persisted. Overall, we show how economic power can translate into political power in a democracy.

DOI

10.1162/rest_a_01531

Pages

1-29

Language

en

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