Political Polarization and Legislative Gridlock: A Comparative High-Frequency Approach

Series: Working Papers. 2636.

Author: Marina Diakonova, Julia Estefania-Flores, Corinna Ghirelli, Ana Peñalosa, Javier J. Pérez and Aitana Simó

International Economy

• Economic policies
• Macroprudential policy

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Political Polarization and Legislative Gridlock: A Comparative High-Frequency Approach (7 MB)

Abstract

We propose a narrative-based approach to construct high-frequency measures of political polarization and legislative gridlock for seven democracies: France, Germany, Spain, Italy, the United Kingdom, the United States and Canada. Our indices reveal that polarization has risen markedly since the Global Financial and Sovereign Debt Crises, with a faster increase in North America than in Europe. Through a range of exercises we show that the two indices respond differently to elections and unified government control, and that the latter weakens the pass-through between political polarization and gridlock. Consistent with the literature, we also find that investment declines following an increase in either index. Together, these high-frequency, cross-country measures provide a new tool for comparative political economy analysis.