How large are the political costs of fiscal austerity?

There are good reasons to think that fiscal austerity can have important costs, and among these is political instability. We suggest that these political costs may be harder to identify than one might assume. Using a broad sample of countries from 1870 to 2011, we ask whether expenditure cuts are associated with increased leader turnover through either regular or irregular means. Ordinary least squares estimates suggest that there is no effect, but this may be due to a bias whereby leaders adopt austerity only when they think they can survive it. As an alternative empirical strategy, we also report instrumental variables estimates in which expenditure cuts are instrumented by exogenous trade and financial shocks, and we continue to observe a null result. Finally, we consider which interpretations of voter behavior might be consistent with our results.