Project description
Citizens' reactions to the debt crisis
A government debt crisis is not a rare phenomenon. However, the perception that citizens have of excessive government borrowing differs from country to country. In some, citizens demonstrate their concern accepting measures that will avoid the crisis while in others not. At the same time, there are no available related studies. The EU-funded MIDEBT project intends to achieve two consecutive aims. It will perform the first inclusive analysis of individual reactions to debt reduction projects before a crisis. It will explain which social support such policies enjoy, its motivations and its stability. Subsequently, it will use the results to understand which groups are in favour of such policies, explaining their interaction with institutions and influence on policymaking.
Objective
This project takes a new bottom-up approach to understanding the political roots of government debt crises. It proposes that in order to understand why governments borrow excessively and experience crises, we must first understand what citizens are thinking (or not thinking) about debt policy. Citizens’ preferences are the cornerstone of political theories because they inform policymakers’ incentives. Yet, no studies have systematically examined why citizens in some countries are willing to take steps before a crisis to reduce government debt while others ignore warnings and reward political inaction.
This proposal pursues two successive objectives.
First, the project will conduct the first comprehensive analysis of individual-level preferences for debt reduction before a crisis. It will develop and test multiple hypotheses that seek to explain which elements of society are (un)supportive of debt reduction policies, what rational or irrational factors motivate their decisions, and how stable these preferences are to manipulation by elites. The analysis centers around original and innovative multi-country survey experiments that elicit the character and stability of preferences for debt reduction.
The project’s second phase uses these insights to connect the micro to the macro. By understanding which groups of citizens are motivated by which material factors or cognitive biases, we will develop new theories explaining how the distribution of these groups, and their interaction with institutions, influence political decisions and ultimately affect the risk of sovereign debt crises. This analysis will include two empirical innovations. First, it will include the first ever survey experiment conducted on actual bond traders to determine which country political and economic factors are most important in assessing credit risk. Second, it will produce a new data set of government attempts to engage in debt reduction.
Keywords
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)
Programme(s)
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
Multi-annual funding programmes that define the EU’s priorities for research and innovation.
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H2020-EU.1.1. - EXCELLENT SCIENCE - European Research Council (ERC)
MAIN PROGRAMME
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Topic(s)
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Calls for proposals are divided into topics. A topic defines a specific subject or area for which applicants can submit proposals. The description of a topic comprises its specific scope and the expected impact of the funded project.
Funding Scheme
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.
ERC-STG - Starting Grant
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Call for proposal
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
Procedure for inviting applicants to submit project proposals, with the aim of receiving EU funding.
(opens in new window) ERC-2019-STG
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Net EU financial contribution. The sum of money that the participant receives, deducted by the EU contribution to its linked third party. It considers the distribution of the EU financial contribution between direct beneficiaries of the project and other types of participants, like third-party participants.
2311 EZ Leiden
Netherlands
The total costs incurred by this organisation to participate in the project, including direct and indirect costs. This amount is a subset of the overall project budget.