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Voters and the IMF: Experimental Evidence From European Crisis Countries

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IMF interventions are often associated with a decline in the political stability of the countries where the Fund intervenes. Studies examining this claim, however, face the challenge of disentangling the impact of the IMF from the impact of the crisis that triggered the intervention. To address this challenge, we conduct survey experiments in Greece, Ireland, Portugal, and Spain and directly assess how voters evaluate the costs and benefits of an IMF intervention. We find that voters believe that the crisis is more likely be solved when the IMF intervenes, but they are also critical of the corresponding loss of national sovereignty. Because the former consideration on average dominates their assessment, IMF interventions increase support of voters for unpopular economic policies. Nonetheless, cross-country differences suggest that continued public support for intervention hinges on the IMF's ability to deliver on its promise to help resolve the crisis.
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Voters and the IMF:
Experimental Evidence From
European Crisis Countries
Evelyne ubscher
Central European University
huebschere@ceu.edu
Thomas Sattler
University of Geneva
thomas.sattler@unige.ch
Markus Wagner
University of Vienna
markus.wagner@univie.ac.at
October 7, 2022
Abstract
IMF interventions are often associated with a decline in the political stability
of the countries where the Fund intervenes. Studies examining this claim, however,
face the challenge of disentangling the impact of the IMF from the impact of the
crisis that triggered the intervention. To address this challenge, we conduct survey
experiments in Greece, Ireland, Portugal, and Spain and directly assess how voters
evaluate the costs and benefits of an IMF intervention. We find that voters be-
lieve that the crisis is more likely be solved when the IMF intervenes, but they are
also critical of the corresponding loss of national sovereignty. Because the former
consideration, on average, dominates their assessment, IMF interventions increase
support of voters for unpopular economic policies. Nonetheless, cross-country dif-
ferences suggest that continued public support for intervention hinges on the IMF’s
ability to deliver on its promise to help resolve the crisis.
Keywords: international organizations; conditionality; fiscal austerity;
sovereignty, credibility; public opinion
Previous versions of this paper were presented at the Annual Conference of the Eu-
ropean Political Science Association (EPSA), Prague, June 23-25, 2022, the ‘Politics of
Economic Policy’ Workshop, University College London (UCL), May 16-17, 2022; the
research seminar of the European Governance and Politics Programme (EGPP) at the
European University Institute (EUI), February 2, 2022; the 27th International Conference
of Europeanists (CES), online, June 21-25, 2021; and the seminar series of the Institute
of Social Sciences, Lisbon, March 25, 2021. We thank the participants of these events
for their comments. We also thank John Freeman for comments on an earlier version
of this project. Pedro Perfeito and Colin Walder provided important research support.
The authors acknowledge financial support from the Swiss National Science Foundation,
grant no. 165480, and the Swiss Network for International Studies.
1
1 Introduction
Political research has long debated to what extent globalization and democracy are com-
patible. Much of this research highlights the gains from international cooperation: joint
eorts to tackle transnational problems provide more eective solutions. Since these
gains make the cooperating countries better o, citizens should support the delegation of
power to international organizations. The success of anti-globalist political parties has,
however, led to a reassessment of how voters perceive the relative costs and benefits of
international integration (e.g., Hooghe, Lenz and Marks, 2019; De Vries, Hobolt and Wal-
ter,2021;Voet en,2021). This research suggests that many voters weight the sovereignty
costs, i.e. the reduced ability of countries to decide freely on key aspects of social and
economic life, more heavily than often assumed.
This tension between eciency and sovereignty is particularly strong in times of eco-
nomic crisis. In such situations, governments often ask for assistance from international
organizations, especially the IMF. The involvement of such an external, technocratic ac-
tor enhances the credibility of economic reforms and allows for a swifter solution of the
crisis (Stone,2002;Gray,2013;Gehring and Lang,2020; Alexiadou, Spaniel and Gu-
naydin,2021). But the outsourcing of decision-making to technocrats and non-elected
ocials also raises concerns about loss of control to a non-elected actor and the resulting
‘democratic deficit’ (Berman,2017;Caramani,2017; Ruiz-Rufino and Alonso, 2017;Bert-
sou and Caramani,2022). This potentially increases political resistance against reform
policies, which may again undermine their credibility (Shim,2022).
A crucial question in this debate is how voters perceive the trade-obetweenhigher
economic credibility and lower sovereignty when the IMF intervenes. Voters are central
when we judge these external interventions because their opinions and their votes
underpin the backlash against international organizations. Although existing research
does not explicitly examine the credibility–sovereignty trade-o, the studies on the po-
litical impact of the IMF tend to conclude that voters do not respond positively to IMF
2
intervention: the presence of the IMF leads to a decline in political support for incum-
bents, creates government instability and reduces satisfaction with democracy (Dreher
and Gassebner,2012; Alonso and Ruiz-Rufino, 2020;Bojar et al.,2022). This suggests
that the perceived costs of the political constraints imposed by the IMF dominate the
perceived benefits of the economic support provided by the IMF.1
A key challenge for these analyses is the diculty to disentangle the impact of the
IMF from the impact of the economic crisis that led to the intervention in the first place.
When governments turn to the IMF, they typically face serious economic problems and
have diculty borrowing money on capital markets. Under these constraints, govern-
ments would necessarily have to adjust economic policy, also without an intervention by
the IMF. An analysis of the causal eect of IMF interventions on voters’ evaluation of
such an intervention, therefore, requires that we identify how voters would have reacted
to the same policy in the same situation without the IMF. Although the literature has
made significant eorts to take this self-selection process into account (Vreeland, 2003;
Stone,2008;Copelovitch,2010a;Chwieroth,2015), the identification of the impact of the
IMF on political and economic outcomes is dicult using observational data.
To addr e ss thi s probl em, we con d uct su rvey exp eri m ents in Gr eece, I rela n d, Port u gal
and Spain to estimate the causal eect of IMF interventions on voter attitudes. This
approach has two advantages. First and foremost, the experimental design allows us to
estimate the casual eect of the IMF on voter evaluations and isolate this eect from
other potential mechanisms that generally are associated with IMF interventions, e.g.
the severity of the crisis or the size of fiscal adjustment. Second, it also allows us to
probe dierent causal mechanisms through which IMF interventions influences voters, in
1Relatedly, IMF interventions may be strategically used by governments to shift the
blame for unpopular policies towards an external actor (Vre eland ,1999;Przeworski and
Vreel a nd,2000). In fact, a recent study (Biten, Kuhn and van der Brug,2022)focusing
on the impact of austerity on trust finds that national governments can eectively shift
the blame for fiscal austerity to international organizations, in their case the EU. But
even if this is the case, this strategy can still undermine democratic satisfaction and the
legitimacy of the international organization.
3
particular the credibility and sovereignty mechanisms highlighted above. With the help
of a causal mediation analysis, we study how exactly voters judge the costs and benefits
of IMF interventions and how dierent considerations countervail each other.
Contrary to the observational studies mentioned above, our key finding is that an
IMF intervention has an overall positive eect on the level of support for an unpopular
economic policy, in our case fiscal adjustment. On average, voters are more likely to
support a fiscal adjustment package with than without IMF involvement. This is the
impact of the IMF when we hold constant the policy, i.e. the size of fiscal adjustment.
The main mechanism behind this result works through the IMF’s impact on economic
credibility: voters expect that the crisis is more likely to be solved if the IMF intervenes,
which translates into greater support for the adjustment policy. At the same time, voters
are aware of the constraints that the IMF imposes on national sovereignty. This is why
IMF interventions negatively influence citizens’ perceptions of the government’s room to
maneuver, which translates into lower support for fiscal adjustment. Taken together,
however, the hope that the crisis can be resolved with the IMF generally dominates the
dissatisfaction over the loss of political control.
In addition, the finding that the IMF has a dual impact on voter perceptions in-
creased confidence in the likely success of the policy coupled with concerns over sovereignty
helps us to understand why reactions to external intervention can vary across crisis con-
texts. In our data, for example, we find that voters in Ireland react most positively to
an IMF intervention, while voters in Greece are very skeptical. This discrepancy exists
because Irish voters have a strong expectation that the presence of the IMF will help to
resolve the crisis, which by far outweighs their worries about sovereignty. In contrast,
Greek voters do not think that the IMF will help to end the crisis, and they associate
the intervention with a loss of democratic control. These dierential assessments are con-
sistent with the diverging experiences these countries made with external interventions
during the Euro crisis. The legitimacy of IMF interventions, thus, critically hinges on
4
the ability of the IMF to deliver on the promise that the crisis is eectively resolved.
2 A Voter Perspective on IMF Interventions
International financial institutions, such as the IMF, nowadays play an important role for
economic policymaking across the globe. When countries face economic diculties, for
instance a sovereign debt crisis, the IMF can intervene and provide an emergency loan.
Such an IMF program takes the form of a contract between the respective country and
the IMF that sets out the conditions for getting the loan and the payback modalities.
These modalities include a set of conditions that aim at addressing the economic prob-
lems, which the IMF sees as a cause of the crisis. The conditions can vary, e.g. by the
degree of policy adjustment, the areas and timing of reform or the payback conditions
(e.g., Vreela nd,2007;Stone,2008;Dreher,2009;Copelovitch,2010a;Dreher, Sturm and
Vreel a nd,2015). Public spending cuts usually are among the most important conditions,
but over the past decades the IMF has increasingly demanded broader, structural adjust-
ments, such as labor market flexibilization (Caraway, Rickard and Anner, 2012). We will
give more detailed examples of such programs below when we discuss the history of IMF
involvement in the four cases that we examine empirically.
The profound impact that the IMF has on domestic policymaking puts it at the
center of debates about democratic legitimacy of supranational governance and the pop-
ular backlash against international cooperation and organizations (e.g., Hooghe, Lenz
and Marks,2019; De Vries, Hobolt and Walter, 2021;Vo ete n,2021). Our analysis con-
tributes to this debate by examining how voters evaluate the costs and benefits of IMF
interventions, and, relatedly, to what extent public evaluations of economic policymak-
ing are input- or output-oriented (Konstantinidis, Jurado and Dinas, 2022). Voters and
their agreement or disagreement with the policies demanded by the IMF are crucial to
understand the degree of democratic deficit and popular discontent that arises from inter-
national political integration. An IMF program presents voters with a trade-obetween
5
the prospect of faster economic stabilization, on the one hand, and a loss of control over
economic policies, on the other hand. In the next two sections, we discuss these two
countervailing mechanisms in detail.
2.1 The IMF and Economic Stability
When governments turn towards the IMF, they often face a situation in which they find
it dicult to borrow on international financial markets. Such a situation arises when
investors doubt that the government will repay its debt in the future and hence are hesi-
tant to lend money or demand very high interest rates to be compensated for the risk of
sovereign debt default. Examples of such crises include the Latin American debt crisis of
the 1980s or the European debt crisis of the past decade.
Akeychallengeforgovernmentsinsuchasituationistoconvinceinvestorsthatthey
have the political strength and willingness to implement the policy measures to restore
financial stability. These policy measures include fiscal adjustments that either increase
public revenues or decrease public expenditures. Since these policies have serious, detri-
mental eects on politically important societal groups, investors may doubt that the
government is able to adjust policy against the opposition of these groups (ubscher and
Sattler,2017;Barta,2018). This undermines the credibility of a policy because investors
understand the temptation to renege on the promise to fix the debt problem (Drazen and
Masson,1994). Often, investors also lack more detailed information about the country
and the government. They then judge economic credibility not based on what govern-
ments do, but based on simple heuristics, such as their views of similar countries (Brooks,
Cunha and Mosley,2015). These circumstances make it very dicult, sometimes impos-
sible, for governments to overcome the crisis on their own.
In such instances, an IMF intervention can help to enhance the economic credibility
of the government because it signals the government’s commitment to economic reform
(Fischer, 1999;Stone,2002). International institutions often serve as commitment device
6
that helps to overcome the resistance of vested interests against economic reform (Baccini
and Urpelainen, 2014). This is also the case for the IMF. Policymakers who are in favor
of reform can use the IMF as a scapegoat, which reduces the political opposition against
reform from veto players (Vr eelan d,1999;Smith and Vreeland,2006). Governments can
also borrow credibility from international institutions when investors lack more detailed
information about the political and economic circumstances of a country (Gray,2013).
This means that IMF involvement can also serve as ‘seal of approval’ that makes a reform
policy more credible even if the content of the policy does not change. More broadly, the
involvement of technocratic policymakers enhances economic credibility because it shows
that the government is willing to incur a political cost, i.e. the loss of policy autonomy,
to ensure debt repayment (Alexiadou and Gunaydin, 2019; Alexiadou, Spaniel and Gu-
naydin,2021).
In this mechanism, voters should value the stabilizing eect of the IMF. Voters have a
strong interest in economic stability and are willing to accept harsh measures when they
face large economic uncertainty (Jurado et al., 2020). Governments that are excluded
from capital markets would have to adjust fiscal policy in any case, also without the
IMF. Voters, on average, should be aware of this precarious situation and be supportive
of measures that show a way forward and out of the crisis. Citizens, for instance, are not
per se opposed to independent experts (Bertsou,2022). They often understand that the
government needs to take steps in order to enhance its economic credibility and that the
IMF can play an important role in this process. With the commitment on the side of the
government to involve the IMF, voters then become more confident that the crisis will be
resolved. From an output-oriented perspective, this should translate into greater support
for tough economic policies, such as fiscal adjustment, when the IMF intervenes.
The following hypothesis captures this mechanism:
H1 (Eectiveness Mechanism): Voters are more optimistic that fiscal adjustment
7
measures will eectively resolve the crisis when the IMF intervenes than when the IMF
does not intervene.
2.2 The IMF and National Sovereignty
The flip side of this mechanism are the potential negative eects that IMF interventions
have on voters’ perceptions of national sovereignty. As we now know, many voters have
become increasingly concerned about the impact of economic and political integration on
their countries (Mansfield, Milner and Rudra,2021;Walte r,2021). International insti-
tutions play an important role for these concerns. Globalization increases the need for
international cooperation to address international problems, such as financial crises that
threaten the stability of the international monetary system. The IMF organizes such a
coordinated response, but it simultaneously reduces policy autonomy, which potentially
increases dissatisfaction among voters.
The conditions imposed by the IMF generally include policies that are not popular
among large parts of the electorate. An example are fiscal adjustment programs, which
typically require significant spending cuts in major areas of the public budget, such as
public pensions, unemployment benefits, public employment, or health care. Cuts in
most of these areas are unpopular among voters and raise political resistance against
them (ubscher, Sattler and Wagner,2019,2021; Alonso and Ruiz-Rufino, 2020;Bojar
et al.,2022;Bremer and urgisser,2022). This does not mean that everybody objects to
these policies. Many voters may regard austerity as the right choice that helps to spur
economic growth and increases economic stability (Barnes and Hicks, 2018). Others may
also benefit from cutbacks, e.g. in the form of lower taxes. In fact, fiscal adjustments are
so contested because voter attitudes over these policies diverge rather than converge.
The involvement of the IMF may help to override the resulting political resistance
against fiscal adjustment. But they can also raise concerns about the democratic legiti-
macy of the policy. When voters hold heterogeneous beliefs and have diverging interests,
8
the autonomy to decide over a policy in a competitive political process is particularly
important. Even voters who do not agree with economic adjustment policies may ac-
cept them if they are decided in a meaningful political contest. The idea of democratic
politics is that a political competition over policies takes place and potentially that a
balanced solution is found. Independent of the content of the actual policy that is ulti-
mately selected, this process is a value in itself that stabilizes societies because voters are
more likely to take ownership of the adjustment measures (Konstantinidis and Reinsberg,
2020). Removing crucial decisions or have them ‘dictated’ by an external, international
actor stands in contrast to the idea of national sovereignty (Konstantinidis, Matakos and
Mutlu-Eren,2019). They deprive voters of the idea that they participated in the decision
process in a meaningful way (Berman,2017; Caramani, 2017;Bertsou and Caramani,
2020,2022).
In light of these concerns, technocratic solutions, like the IMF, can be seen as a “chal-
lenge to democratic self-government” (S´anchez-Cuenca,2020). Political competition over
economic policies is reduced or even eliminated under technocratic policy-making. Tech-
nocrats “often come with a set of fixed ideas about the nature of the reforms to be
adopted” (Alexiadou, 2020, p. 215) that are grounded in the idea that an ‘optimal’
policy exists, which puts in question the necessity of political debate and reconciliation.
The IMF is no exception in this respect. The IMF has been characterized as a promoter
of neoliberal economic ideas that has used its power to impose policies in line with this
approach on the countries under an IMF program (Chwieroth,2010). As a result, voter
satisfaction with democracy decreases when voters have the perception that their govern-
ments do not have a meaningful choice (Armingeon and Guthmann, 2014;Ruiz-Rufino
and Alonso, 2017). From an input-oriented perspective, this should translate into lower
support for tough economic policy decisions, such as fiscal adjustment.
The following hypothesis captures this mechanism:
9
H2 (Sovereignty Mechanism):Votersaremorelikelytoperceivescaladjustmentsas
going against popular will if mandated by the IMF.
2.3 The Eect of the IMF on Policy Approval
These two mechanisms point to countervailing eects that the IMF can have on voters.
The overall eect of the IMF on voter approval, therefore, depends on the weight that
voters attribute to each mechanism. There are good reasons for voters to put significant
weight on either mechanism. For instance, the loss of sovereignty under IMF programs is
temporary, while the benefits of economic stabilization are meant to be more long-term.
This would speak in favor of the eectiveness mechanism. Yet, the economic gains only
materialize in the future and are more uncertain, while the loss of control is imminent
and unambiguous. This would speak in favor of the sovereignty mechanism. How much
individual voters weight each mechanism, therefore, is ultimately an empirical question.
Similarly, there is less a priori reason to expect countries to dier much in terms of
their emphasis on political control. While the degree of nationalism and the emphasis
on sovereignty may vary across countries, the countries included in our analysis are all
longstanding members of the European Union and embedded in the supranational in-
stitutional architecture in a similar way.2Also, all four countries are solidly grounded
representative democracies.
There are, however, reasons to expect that voters in dierent countries, on average,
have dierent perceptions of the benefits of an IMF intervention. The economic and social
impact of IMF programs on countries can vary considerably (Vre eland ,2003;Kentikelenis,
Stubbs and King,2016;Lang,2021), depending on the economic structure of the country
or other factors. Particularly relevant for people’s assessment of IMF interventions could
be the success of previous IMF interventions. For European countries, for instance, the
2Overall, public attitudes towards international institutions has grown more negative
over the past decades (Bearce and Scott,2019). This trend, however, is very similar
across countries.
10
Euro debt crisis represented the first interaction with the IMF for decades, and few prior
expectations existed. However, the experiences citizens in the four countries made during
the path to recovery dier greatly, as we describe in section 3.2.Theseexperiencescan
influence their ex-post evaluation of the intervention and the expectations that they have
about future interventions.
Overall, this means that if voters, on average, are convinced that the IMF will eec-
tively help to restore economic stability, they may find a temporary loss of democratic
control less problematic and primarily see the benefits of such an intervention. If they
doubt that the IMF will provide the right economic policy solutions, then they may pri-
marily see the costs of an intervention arising from lower democratic accountability.
H3 :Ifvoters,onaverage,weighteectivenessmore,approvalwithscaladjustment
should be higher when the IMF intervenes than when the IMF does not intervene. If
voters, on average, weight sovereignty more, approval with fiscal adjustment should be
lower when the IMF intervenes than when the IMF does not intervene.
3 Research Design
3.1 Empirical strategy
Research on the political eects of IMF involvement faces an important challenge. To
identify the causal eect of the IMF on voter attitudes and behavior, we need to compare
a fiscal adjustment measure with the IMF to an identical (or similar) situation of fiscal
adjustment without IMF involvement. For instance, if we compare an IMF intervention
in a crisis situation to the lack of IMF intervention in normal times, then we cannot
disentangle the eect of the intervention from the eect of the crisis. Or, if we compare
an IMF intervention that entails a fiscal adjustment package to a situation without the
IMF and no fiscal adjustment, then we cannot disentangle the eect of the IMF from
the eect of policy. This is problematic because voters may also punish governments for
11
economic crises and fiscal spending cuts in situations when the IMF does not intervene.
Researchers who study the IMF are well aware of this problem. Most analyses to-
day make a serious eort to address the problem that countries under an IMF program
are systematically dierent from countries without a program (Przeworski and Vreeland,
2000;Stone,2008;Copelovitch,2010b;Chwieroth,2015). This research employs sophis-
ticated empirical models that distinguish between dierent stages of the selection process
into an IMF program. For instance, the models account for the government’s decision
to demand financial support and the IMF’s decision to respond to the country’s request.
Modelling this process helps to reduce the bias that arises from non-random selection
into IMF programs, but it can only imperfectly address the resulting problems for causal
inference.
We address this problem through survey experiments, which have two advantages in
this context. First, they allow us to present dierent scenarios to voters that are identical
except for whether there is an IMF intervention or not. We do this by using vignette ex-
periments embedded in population surveys. By randomly assigning respondents to either
a scenario involving the IMF or a scenario without IMF involvement, we can identify the
causal eect of IMF interventions on the responses of voters. Second, survey experiments
allow us to examine the political eects of IMF interventions at the individual level rather
than relying on aggregate election results. In this way, we examine a crucial link in the
mechanism that connect IMF interventions and the political stability of a country.
Our experimental design follows previous analyses of public opinion in international
politics (Tomz a nd Weeks ,2013;Mattes and Weeks,2019). We provided all respondents
with a general scenario that takes place in the future, in 2026. Respondents were told
that their country is experiencing an increase in the level of public debt and that the
government is finding it more dicult to borrow money on financial markets. The head
of government therefore announces that spending cuts will be implemented, which will
12
aect funding for a broad range of areas, including public pensions, health care, education
and public transport. And finally, the main opposition party criticizes the measures and
doubts whether they will be successful.
Within this general description, we randomly manipulated four aspects of the sce-
nario, which yields a 2 222 experimental design. First and foremost, one group
of respondents learned that the spending cuts are a condition from the IMF. Specifically,
respondents in this group read: “The Prime Minister says that these spending cuts are
necessary. This is because the International Monetary Fund (IMF) has made these cuts
a precondition for [country] to get an emergency loan that could stabilize the financial
situation. The IMF is an international organization that provides emergency loans to
countries in crisis, but only to governments who commit to carry out certain reforms.
[Country] would not receive the IMF loan without the cuts.” The statement about IMF
involvement was omitted in the scenario presented to respondents of the other group.
We deli b er a tely r efer to t he IMF in stea d o f the EU i n g ener al, a sp eci c EU ins titu t ion
or the Troika, even though the EU played an important role for past financial interven-
tions in the countries that we examine (see below).3Financial assistance is one of the
IMF’s primary functions, and the IMF regularly intervenes in this manner in member
states. In contrast, financial assistance was an exceptional role that the EU took for the
first time during the Eurozone crisis. Given the EU’s importance for many other issue
areas, respondents have many other connotations when they think about the EU, which
in turn are aected by the respondent’s general support for the EU. The IMF, therefore,
better represents the type of organization that is central for our analysis of technocratic
external interventions during financial crises.
In addition to the IMF intervention, we also manipulated the size of the debt increase
3During the Eurozone crisis, governments in crisis countries interacted with the so-
called Troika, which consisted of representatives from the IMF, the European Central
Bank and the European Commission.
13
and the seriousness of the economic situation; the size of the spending cuts and how
seriously they aect public spending; and the partisanship of the government and the
main opposition party. The latter was varied between the two largest parties at the
time in a country.4These additional treatments allow us to rule out potential con-
founders. Respondents may associate IMF interventions with more serious crises, greater
spending cuts or a particular type of government. By manipulating these dimensions, we
can isolate the impact of the IMF from these other factors that often covary with the
IMF. At the end of the experimental part, we summarized the situation again for the
respondent using four bullet points, one for each treatment. Table 1summarizes these
four treatments. The exact wording and setup of our experiment is in Appendix A.
Table 1: Trea t ments
Treat m ents At trib u tes of t reatm ent
IMF Intervention [yes] [–]
Government partisanship [right] [left]
Size of proposed cuts [moderate] [large]
Severity of crisis [moderate] [large]
After the description of the scenario, we asked respondents to evaluate the govern-
ment’s decision. Specifically, respondents were asked: “To what extent would you approve
of the Prime Minister’s announcement to impose spending cuts in response to the debt
crisis?” They could then respond using a slider on an 11-point scale where 0 means
‘strongly disapprove’ and 10 means ‘strongly approve’. We also asked respondents if they
would vote for the government after this announcement, which they could respond with
‘Yes’ or ‘No’. In the analysis, we concentrate on policy approval, but we discuss the
results for vote intentions in the text and show the results in Appendix C.
4Fianna Fail and Fine Gael in Ireland, Pasok and Syriza in Greece, PS and PSD in
Portugal, and PP and PSOE in Spain.
14
3.2 Countries and context
We cond u cted t he survey e xpe rime nt i n the fou r countr i es tha t we r e at the c enter of th e
European debt crisis: Greece, Ireland, Portugal and Spain. The survey was carried out
in August 2020. It was administered by Ipsos, which either used its own country-specific
panels or collaborated with other firms to provide a large enough sample of respondents.
Respondents were selected from these access panels using gender- and age-based quotas.
The individual country-samples are restricted to voting-age nationals under the age of
70. In each country, we surveyed approximately 1’200 respondents.
We ch ose th e se fou r c ountri es be caus e t he IMF i nt erventio n t hat we des crib e rep-
resents a plausible scenario for respondents in these countries. The IMF was part of
external interventions in all four countries during the European debt crisis, which gives
respondents an idea what such an intervention entails for them and their country. This
prior experience, therefore, enhances the external validity of our analysis. In contrast, it
would be unclear what an IMF program means for voters in countries that have never
seen such a program and are unlikely to see one in the near future, e.g. in Germany
or the U.S..5At the same time, the prior involvement of the IMF in these countries
requires that we interpret our survey results in light of these prior experiences and the
varying, country-specific contexts. Our multi-country approach has the advantage that
we can examine how voters in dierent countries perceive the costs and benefits of IMF
interventions dierently. This allows us to explore the scope conditions of our findings,
which we will discuss at the end of the results section.
For instance, the origins of the debt crisis diered significantly between Ireland and
Spain on the one hand, and Portugal and Greece on the other. In Ireland and Spain,
5We decided to constrain our analysis to Europe instead of selecting countries from
other parts of the world where the IMF has intervened regularly, e.g. Latin America.
By focusing on Europe we limit the contextual variation because the IMF interventions
happened roughly at the same time (see Tabl e 2)andtheinterventionswerearesultof
the same, overarching economic and sovereign debt crisis in the Eurozone.
15
the crisis followed a construction and credit boom that led to a housing bubble, which
in the wake of the global financial crisis resulted in a collapse of the domestic banking
infrastructure. In a first response to this crisis, both countries designed packages to rescue
banks and nationalized key mortgage lenders. Both economies experienced a significant
increase in unemployment, emigration and a sharp rise in public debt. As a result, they
called on the IMF/Troika for support. While the IMF intervention in Ireland took place
in 2010, Spain first tried to address the problems on its own, but had to resort to the
IMF in 2012. The financial support for Spain came exclusively from the EU, but the deal
and reform conditions were negotiated in close cooperation with the IMF. Both countries
exited the program within a relatively short time frame (Ireland at the end of 2013, Spain
at the beginning of 2014). Ireland’s economic recovery was smoother than Spain’s, which
can be partially attributed to the high interconnectedness and financialization of the Irish
economy. In Spain, dierent types of reforms helped to increase the share of exports, but
youth unemployment and sluggish domestic consumption remained a problem.
Table 2: Deficit, Austerity, and Bailouts
Deficit 2009 Deficit 2010 IMF* EU* Austerity**
Greece (2010/12) -15.5% -12.0% 91.3 182.0 23.6%
Portugal (2011) -9.9% -11.4/% 26.0 52.0 16.8%
Spain (2012) -11.3% -9.5% 0.0 41.3 11.3%
Ireland (2010) -13.9% -32.1% 22.5 45.0 14.5%
Notes: * in billions (); ** cumulated spending cuts and tax increases as % of GDP, 2008-2015.
Source : Devries et al. (2011); Alesina et al. (2019), and own analysis of IMF Reports.
Portugal and Greece struggled with structural economic problems already before the
financial crisis. While the international financial crisis worsened the Greek situation,
other factors, such as large fiscal deficits and endemic tax evasion and tax avoidance
accelerated the crisis. Greece turned to the IMF in 2010 for the first time after new data
revealed the real extent of Greece’s public deficit and debt, which de facto excluded the
country from private capital market. The country turned to the IMF again in 2012 and
2015 and exited these programs only in 2018. The length and the multiple interference
of the IMF shows that economic recovery was very slow. In comparison, the depth of the
16
crisis in Portugal was less severe, but the country also faced sharp pressure from financial
markets and was unable to refinance government debt without the help of third parties.
The Portuguese government turned to the IMF in 2011 and was part of a program until
mid-2014. Table 2 provides an overview of the situation in the four countries at the time.
78 22
66 34
71 29
61 39
010 20 30 40 50 60 70 80 90 100
Share (in %)
Spain
Portugal
Ireland
Greece
Soft conditions Hard conditions
Figure 1: Proportion of hard vs. soft conditions demanded by the IMF; Source:
Kentikelenis, Stubbs and King (2016) and own analyses (esp. for Spain).
In line with the varying economic context in the four countries, the IMF programs
diered on multiple dimensions. The IMF literature dierentiates between soft and hard
conditions that a country must fulfill in order to receive financial support. Soft conditions
can usually be changed retrospectively, while hard conditions represent the reforms that
a country has to implement independent of potential changes in government. As Figure
1 shows, the share of soft- vs. hard conditions was higher in Portugal and especially in
Greece and Portugal and lower in Ireland and especially Spain.6
Figure 2 shows which policy areas were most aected by conditionality, as the ab-
6The original data provides information on the conditions listed in the memorandum
of understanding (MoU) between the IMF and the respective country. For the purpose
of this paper, some policy areas were merged and data recoded (see the Appendix for
details). Since the financial support for the Spanish financial sector was provided by
the EU, there is no formal MoU between the IMF and Spain. We, therefore, coded the
agreements between the EU and Spain ourselves using the same coding scheme as the
one used by Kentikelenis, Stubbs and King (2016).
17
0
50
100
150
200
Number of conditions / domain
Greece
Ireland
Portugal
Spain
00 100 000
42 31 7 6 8 5
35 37 29 000
46 22 9 4 11 8
020 40 60 80 100
Share (in %)
Spain
Portugal
Ireland
Greece
Fiscal issues (revenue/tax) External debt Monetary policy, CB, fin. reforms
Institutional reforms Labor issues Privatization/SOE
Figure 2: Reform conditions by policy dimensions (absolute numbers and %);
Source: Kentikelenis, Stubbs and King (2016)andownanalyses.
solute number of conditions in a policy area (left) and the share of conditions in this
area relative to the total number of conditions (right). We dierentiate between six core
policy fields, three of them are closely linked to fiscal policy (revenues and taxes), debt
management, and financial regulations. The other three dimensions are more related to
labor markets and state interferences in markets. The following pattern emerges. With
the exception of Spain, most IMF conditions concerned a) fiscal policy issues (revenue
and taxes) and b) the size and management of external debt. The third, large policy
dimension was related to monetary policy, the regulation of the financial sector and cen-
tral banking. This confirms that the focus on fiscal adjustment in our survey experiment
touches upon a highly salient component of IMF programs.
In terms of country variation, we see again that Greece had to implement the highest
numbers of reforms, of which almost half of the reform requirements were linked to scal
issues. The Greek government, for instance, had to implement significant spending cuts,
but also to increase taxes, in order to reduce the fiscal deficit. Portugal also faced a
18
significant share of reforms related to fiscal policy-making, but the absolute number of
conditions imposed in this sector was smaller. This is also the case for Ireland and
especially Spain whose bailout package was mostly designed to stabilize the Spanish
banking sector. Portugal and Greece also had to liberalize labor markets, privatize state-
owned firms and other specific services, such as telecommunications and energy, and
implement other institutional reforms. Again, the number of conditions in Greece in
these policy areas was larger than that in Portugal.
4 Results
The main result of our experiment concerns the treatment eect of including IMF loan
conditionality in the vignette. Figure 3 shows the dierence in approval of fiscal adjust-
ment for respondents who were exposed to a scenario in which adjustment is mandated
by the IMF and respondents that were exposed to a scenario in which adjustment is
announced without the involvement of the IMF. The figure oers two key take aways.
(1) The level of approval for austerity on average is higher for respondents who were
exposed to the IMF treatment than for respondents who were exposed to a vignette that
does not mention the involvement of the IMF. This is the case for most increments of our
dependent variable, but particularly pronounced for higher levels of approval. (2) When
disaggregating the data and assessing approval of austerity for each country individually,
we see a more nuanced picture. What stands out in particular are the particularly high
levels of approval of austerity in Ireland, particularly in the case in which austerity is
mandated by the IMF. A similar picture is present for Spain, whereas in Greece and in
Portugal, the overall level of approval of austerity is lower on average and the dierences
between the two groups is not as pronounced as for the other two countries.7
7Also note that there is a large fraction of respondents who strongly disagree with
fiscal adjustment, i.e. who chose 0, while only few strongly agree, i.e. who chose 10 on
the 11-point scale. This is especially the case for Greece and Spain and to a lesser extent
in Portugal in Ireland. In the latter three countries, the IMF treatment has a fairly strong
eect on those who strictly oppose fiscal adjustment, but not in Greece.
19
Figure 3: Distribution of IMF conditionality across dierent levels of voter
approval for austerity package
In line with these results, Figure 4 shows that the IMF treatment has a statistically
significant, positive eect on support for the adjustment package. Specifically, approval
for that package increases by .3 units on the 0-10 scale when the IMF is involved. This
eect is statistically significant at the 0.001 level for all four countries combined. This is
equivalent to about ten percent of the standard deviation of the outcome variable (2.6
units). We also note that this eect is large compared to the other three treatments
included in the vignette (see Appendix B). The size of the debt has no overall eect
(p=0.2), while the eect of the size of the spending cuts is about half the size of that of
IMF involvement and less clearly statistically significant (p=0.1). The overall eect of
the party in government is also not statistically significant (p=0.68), though additional
analyses show that, unsurprisingly, reactions to this treatment are strongly conditional
on whether the voter is a supporter of the party in government.
While the overall treatment eect of IMF involvement is positive, it also varies by
20
Figure 4: Eect of IMF conditionality on voter approval for austerity package
country, with the clearest positive eect in Ireland and Spain. In Portugal, the positive
response is also positive and similar in magnitude, if not statistically significant at the
0.05 level. Overall, the eects in Portugal, Spain and Ireland are nevertheless broadly
similar. However, in Greece there is no positive, statistically significant response to IMF
conditionality. This may be related to the overall experience of the economic crisis com-
pared to the other three countries.
Besides these average eects, the heterogeneity of voters yields additional insights
into the reasoning that underpins their choices. Figure 5 shows how five voter-level char-
acteristics moderate the treatment eect: left-right ideology, economic ideology, trust in
international institutions, government or opposition support, and mainstream or radical
party vote.
Left-right ideology is measured using the standard 0-10 left-right question; economic
ideology is measured using the mean response to five questions referring to economic
questions;8trust in international institutions is measured using mean trust, on a 0-10
8The five statements are: Governments should redistribute income from the better
oto those who are less well o; Major public services and industries ought to be in
21
scale, towards the United Nations and the World Bank; and mainstream and radical
party vote is measured using past vote choice.9The models that examine the HTE for
ideology control for the HTE for trust in international institutions (and vice versa), and
the models that examine the HTE for vote control for whether one’s perferred party is
in government in the experimental vignette.
Turni n g to the r esult s, we can se e that b oth le ft-ri ght ideo logy an d econo mic id e olog y
moderate the treatment eect in similar ways: left-wing individuals are more likely to
support the measures if the IMF is involved. Note that this does not mean that left-wing
voters are more supportive of adjustment packages, as these (as expected) are more likely
to oppose the measures than right-wing voters. Rather, IMF involvement reduces the gap
between left- and right-wing voters, with the former less likely to oppose the measures.
Unsurprisingly, we can see that those who trust international institutions are more likely
to react positively to IMF involvement. Note that only the interactions with left-right
and economic ideology are statistically significant.
The same Figure also presents heterogeneous treatment results by partisan support.
While the dierences in these HTEs are not themselves statistically significant at con-
ventional levels, their direction does exhibit relevant patterns. Thus, the bottom left
panel shows that those who do not support the governing party (which varied randomly
in the vignette) are more likely to respond positively to IMF involvement. This is consis-
tent with the notion that IMF involvement helps to garner support from individuals who
would otherwise oppose government policies. The bottom right panel shows, consistent
state ownership; Government should take more responsibility to ensure that everyone is
provided for; Competition is bad and mostly favors the strongest; People can only get
rich at the expense of others. Opinions measured on a standard 5-point agree-disagree
scale. The scale was reserved so higher values are more right-wing.
9Mainstream parties are: PASOK, ND, To Potami, Enosi Kentroon, Dimar
(Greece),PS, PSD and CDS-PP (Portugal) and PSOE, PP and Ciudadanos (Spain).
Radical parties are: Syriza, ANEL, Golden Dawn, KKE, Laiki Enotita (Greece); BE
and PCP (Portugal); and Podemos and VOX (Spain). Ireland is not included in these
analyses.
22
Figure 5: Tre atment e e cts, by vote r-level ch a ract e rist ics
with the HTEs for ideology, that radical party supporters are less likely to react posi-
tively to IMF involvement. Radical party supporters may be more likely to oppose IMF
involvement on sovereignty grounds (from the right) or on eectiveness grounds (from
the left). We examine these mechanisms in more detail in the next section.
4.1 Mechanisms
We now turn the question of the mechanisms that underlie the eect of I MF involve-
ment on approval of the policy package. The experimental setup has the advantage that
we can also explore these mechanisms individually. After asking about approval for the
package and vote choice, we therefore ask additional follow-up questions that capture the
dierent mechanisms discussed in our theoretical section. The eectiveness mechanism
suggests that voters believe that a policy package will be more likely to be successful if
it is demanded by the IMF. To test this, we asked whether respondents ‘think that the
government’s decision to cut spending will be successful or unsuccessful in resolving the
23
debt crisis?’ For the sovereignty mechanism, we also asked about national sovereignty,
so whether IMF involvement reduces national room to manouevre. We asked to what
extent respondents ‘think that the government was free to choose its own response to this
debt crisis?’ We also tested two related mechanisms based on competence and political
accountability. For competence, we asked whether respondents ‘think that, in this debt
crisis, the government proved to be a competent or an incompetent manager of the econ-
omy?’ For accountability, we asked to what extent respondents ‘think that the decision
to cut spending matches the views of the [Irish/Spanish/Portuguese/Greek] voters?’
Using these mechanisms as outcome variables shows that the IMF treatment has an
eect on perceived eectiveness and perceived sovereignty (see Figure 6). The overall
model shows that IMF involvement increases the perceived probability that the package
will be successful by about 0.2 units. At the same time, IMF involvement reduces the
perceived sovereignty of the national government: perceptions that the government was
free to choose its own policy are about 0.4 units lower if the IMF treatment is mentioned
in the vignette. The IMF treatment does not aect the measures capturing competence
or democratic accountability. We also find that perceived eectiveness and sovereignty
themselves aect approval for the policy package (see Appendix D).
Next, we use causal mediation techniques developed by Imai, Keele and Tingley (2010)
and Imai, Keele and Yamamoto (2010) to calculate the average causal mediation eectof
each of these four mechanisms (for a similar approach, see Mattes and Weeks,2019). Fig-
ure 7 shows that there is one dominant mechanism: voters approve of the policy because
they believe that a package demanded by the IMF will be more eective in resolving the
debt crisis. The average causal mediation eect of eectiveness is about .11, with 40 per
cent of the total eect mediated by this mechanism.
Interestingly, this positive mediating eect is counteracted slightly by the negative
mediating eect of the IMF treatment on the perception that the national government
24
Figure 6: Tre atment e e cts on m e diat ors, by cou nt ry
was free to choose its own path (sovereignty). The average causal mediation eect of
sovereignty is about -.04, with -14 per cent of the total eect mediated by this mecha-
nism. Hence, we also find that IMF involvement makes respondents see the government
as less sovereign, reducing support for the policy package. However, this eect is not
strong enough to outweigh the positive eect of IMF involvement on the perceived eec-
tiveness of the programme.
Figure 7 shows that the two other perceptions we tested are not relevant mediators:
the eect of IMF involvement does not occur via either accountability, so the extent to
which the package matches the wishes of each country’s voters, or competence, so how
well the government is seen as managing the economy.
Finally, Figure 7 also shows that these mediating eects are similar across contexts.
Concerning perceived eectiveness, the main exception is Greece, where it is not via this
25
Figure 7: ACME for each mechanism, by country
mechanism that IMF involvement has an eect on approval of the policy package. Turn-
ing to the government’s national sovereignty, the eects are remarkably similar, even if
the mediating eect for Spain is smaller than for the other countries. The hypotheses
concerning the other two mediators find no support in these results, with the exception of
Ireland, where IMF involvement aects approval by increasing perceptions of competence
among respondents.
In sum, we find that the key mechanism through which IMF involvement aects pub-
lic attitudes towards fiscal adjustment is via perceived eectiveness. When voters learn
that the policy package is part of an IMF program, they believe that this package will
be more likely to resolve the crisis. At the same time, IMF involvement also reduces
perceptions of national sovereignty, which in turn lowers approval for the policy package.
However, this negative eect is not large enough to outweigh the positive impact of IMF
involvement overall.
26
Although the cross-country dierences are not the central part of our analysis, they
are still useful to get a sense of the scope conditions of our findings. As we describe in
section 3.2, the nature of the IMF intervention and the macro-economic recovery from
the European debt crisis diered considerably in our four countries. Our results reflect
these dierences in prior experiences. The assessment of the IMF is most positive in
the two countries that saw fewer conditions and swifter recovery, Ireland and Spain. It
is more critical in the two countries that saw more conditions and a more dicult eco-
nomic recovery, Portugal and especially Greece. This does not necessarily mean that the
programs were inadequate or that this co-variation on the macro level implies a causal
relationship between past experiences and popular evaluations of the IMF. But we find
it plausible that voters relate IMF programs in their countries to their memory of the
crisis, and that they rely on those experiences when they evaluate new programs.
This also means that our respondents did not enter our experiment as entirely neutral
subjects. Their diering experiences means that their ‘pre-treatment’ varies, from rather
positive in some countries to quite negative in others. Our multi-country approach,
therefore, is useful to delimit the boundaries of the overall impact of the IMF on public
assessment of fiscal adjustments. Our results show that the overall impact, if there is
one, is positive and not negative as suggested by some previous studies. An alternative
strategy would have been to select countries in which voters have had no experience with
the IMF, but this would have raised stronger questions of external validity. Considering
that the IMF often intervenes in countries that already had IMF programs at an earlier
stage, we find it important to explore the variation in public reactions that is related to
dierent prior experiences of voters with the IMF.
27
5 Conclusion
This paper examines how voters judge the credibility–sovereignty trade-othat charac-
terizes the delegation of economic policymaking to technocratic, external actors, such as
the IMF. We find that the impact of external interventions on voter approval with fiscal
adjustment depends on how voters judge this intervention: does it make it more likely
that the implemented policies will be successful, or does it underline the loss of national
sovereignty to international institutions? The extent to which the involvement of external
actors will aect popular support for fiscal adjustment thus depends on the mix of these
two considerations among voters.
Interestingly, our country-level results imply that increased policy eectiveness often
weighs more heavily than perceptions of decreased sovereignty. This means that the ef-
fects of the involvement of external actors may often be more positive than is generally
assumed. Our results dier from previous research (e.g., Dreher and Gassebner,2012;
Alonso and Ruiz-Rufino, 2020;Bojar et al.,2022) because our experimental approach
allows us to disentangle the impact of the IMF from the impact of the economic situation
of the country that needs a rescue package. Although voters are dissatisfied with the loss
of democratic control, their expectation that the IMF helps to resolve the crisis dominates
in many countries, in our case in particular Ireland, but also Portugal and Spain. Yet, we
did not find a positive overall reaction in Greece, which had notably negative experiences
with the IMF in prior crises.
By design, our analysis identifies the impact of IMF presence holding other important
factors constant, such as the size of fiscal adjustment. In other words, we assume that the
IMF does not change policy and that the same fiscal adjustment would have taken place
without the IMF. While this is a clear advantage of our experimental approach, it is also
important to remember this feature of our design when thinking about the implications
of our findings. Hence, our analysis does not tell us about the political consequences that
would occur if the IMF demands harder adjustment measures than would have occurred
28
otherwise, with potential negative eects, for instance, on social inequality (Lang,2021).
If the presence of the IMF leads to more stringent policies, then the negative eect of
additional adjustment on political support may well cancel out the positive eect of IMF
presence through economic credibility.
More broadly, our analysis does not show general support for the ’technocratization’
of economic policy. While the involvement of technocrats can be useful in a situation
of crisis, voters may not be willing to give up political control in normal times. Our
results suggest that voters in fact are conscious of the democratic challenges that come
with technocratic solutions. Relatedly, an important question concerns the downstream
electoral eects of policy approval. We found that IMF involvement or international in-
tegration more generally reduces perceived national sovereignty, which in turn reduces
economic voting (Hellwig and Samuels, 2007;Costa Lobo and Pannico,2021). The in-
creased support for the policy package may therefore not translate into electoral benefits.
Indeed, we find weaker eects for vote choice in our analyses.
29
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