Tim Vlandas

The impact of the elderly on inflation rates in developed countries

What explains the cross-national variation in inflation rates in developed countries? Previous literature has emphasised the role of ideas and institutions, and to a lesser extent interest groups, while leaving the role of electoral politics comparatively unexplored. This paper seeks to redress this neglect by focusing on one case where electoral politics matters for inflation: the share of the population above 65 years old in a country. I argue that countries with a larger share of elderly have lower inflation because older people are both more inflation averse and politically powerful, forcing governments to pursue lower inflation. I test my argument in three steps. First, logistic regression analysis of survey data confirms older people are more inflation averse. Second, panel data regression analysis of party manifesto data reveals that European countries with more old people have more economically orthodox political parties. Third, time series cross-section regression analyses demonstrate that the share of the elderly is negatively correlated with inflation in both a sample of 21 advanced OECD economies and a larger sample of 175 countries. Ageing may therefore push governments to adopt a low inflation regime.

Grey power and the Economy: Aging and Inflation Across Advanced Economies:

What explains the cross-national variation in inflation rates across countries? In contrast to most literature, which emphasizes the role of ideas and institutions, this article focuses on electoral politics and argues that aging leads to lower inflation rates. Countries with a larger share of elderly exhibit lower inflation because older people are both more inflation averse and politically powerful, forcing parties seeking their votes to pursue lower inflation. Logistic regression analysis of survey data confirms that older people are more inflation averse and more likely to punish incumbents at the ballot box for inflation. Panel data regression analysis shows that social democratic parties have more economically orthodox manifestos in European countries with more elderly people, and that the share of elderly is negatively correlated with inflation in both a sample of 21 advanced economies and a larger sample of 175 countries. Aging therefore pushes governments to pursue lower inflation.

The Politics of Disinflation

What explains the shift from the moderate to high inflation rates of the Golden Age of post-war capitalism to the low inflation regime of monetarism in the 1970s and 1980s? Conventional views emphasise the rise of monetarism as a new economic paradigm that convinced policy makers to delegate monetary policy to conservative and independent central banks – a view that comes in many variants, from constructivist to orthodox economics. In contrast to these arguments, we introduce electoral and party politics into the debate. This paper models and examines the shifts in the inflationary preferences of the median voter and their translation into party politics and economic policies. As the median voter accumulates nominal assets against a background of de facto and de jure increasing job security and rising wages, her preferences on macro-economic policies shift from concerns about employment-friendly to inflation-averse policies. Social democratic parties, who are pivotal players in this regard because of their ‘natural’ preference for high employment over low inflation, are thus forced to adopt antiinflation policies as well to remain electorally viable. We show that the employment situation of the average worker improved in every respect during the 1960s and 1970s, that most of the population became inflation averse during the 1970s and 1980s, and that social democratic parties were forced to adopt more economically orthodox party manifestos. We then analyse the shift to a low inflation regime in a series of country case studies.

Voting to leave: economic insecurity and the Brexit vote

This chapter focuses on the political economy of the Brexit vote. It contributes to the debate on British Euroscepticism by examining the impact of economic insecurity. More specifically we explore the determinants of individual support for Brexit by focusing on several factors relating to economic insecurity that have all received significant attention in broader political economy debates including income, occupation, unemployment, poverty and the level and type of education. Our analysis pays particular attention to the labour market position of individuals and the labour market risks they face as we want to examine whether- and if so how- the risk of being unemployed, the risk of being in poverty and housing risk have influenced support for Brexit. We also investigate the impact of income level and source, of being in low skill occupations in areas where immigration has been particularly salient, and of having studied a higher education degree that is ‘protective’ (medicine or law).

Why Far Right Parties Do Well at Times of Crisis: The Role of Labour Market Institutions

This working paper argues with extensive statistical analysis that the rise of far-right parties in Europe has less to do with the economic crisis and unemployment levels as such but more with specific labour market policies and institutions. The authors show that the deregulation of employment protection legislation and the reduction of employment benefits have in many countries intensified the support for these far-right parties.