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10 january 2011, masochistic voters

Some proof, perhaps, of what I have long suspected: that although instincts and the governor of the bank of england suggest that the purveyors of the biggest cuts in public expenditure in the uk this side of the battle of hastings are likely to be out of power after all this for a generation; instincts and the governor may be wrong. Alesina, carloni and lecce, nicely summarised in the economist studied the ten harshest periods of cuts in western, i.e. oecd, countries and the elections that followed them within 2 years. 37% saw a change of government - compared to an all-period average of 40%; statistically insignificant. This also works for the harshest 60 cuts periods. As interestingly, there was a great difference between those instances where spending cuts took the strain, with just 20% of governments losing their jobs, as opposed to tax rises, where it was 56%. There are of course many questions like cause and effect (was it strong governments that could implement the cuts ?) but the evidence here is pretty strong: if fiscal consolidation is the right thing to do, voters can be made to understand it, and purposeful governments can reap the reward.