DP15479 Economic Uncertainty and Divisive Politics: Evidence from the "dos Españas"
|Author(s):||Sandra Garcia-Uribe, Hannes Felix Mueller, Carlos Sanz|
|Publication Date:||November 2020|
|Programme Areas:||Economic History, Macroeconomics and Growth|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=15479|
This article exploits two newspaper archives to track economic policy uncertainty in Spain in 1905-1945, a period of extreme political polarization. We find that the outbreak of the civil war in 1936 was anticipated by a striking upward level shift of uncertainty in both newspapers. We study the dynamics behind this shift and provide evidence of a strong empirical link between increasing uncertainty and the rise of divisive political issues at the time: socio-economic conflict, regional separatism, power of the military, and role of the church. This holds even when we exploit variation in content at the newspaper level.