2012年-CEPS欧洲政策研究中心_Has_the_financial_crisis_spurred_demand_for_stronger_state_regulation_19页_348kb

Summary: Has the Financial Crisis Spurred Demand for Stronger State Regulation?

Core Content

This working document by Felix Roth investigates whether the financial crisis has led to a decline in citizens' confidence in the free market economy and an increase in their demand for a free market economy with stronger state regulation. Using panel data from the GlobeScan survey, the study focuses on major economies in Europe, the US, Canada, and Japan, analyzing the impact of the crisis on public perception.

Main Viewpoints

• Citizens' confidence in the free market economy has decreased in most of the largest economies following the financial crisis.
• Demand for a free market economy with stronger state regulation has increased on both sides of the Atlantic and in Japan.
• The decline in confidence appears to be driven by rising unemployment rates, while the increase in demand for regulation is associated with the real economic downturn in GDP growth.
• The financial crisis has shattered long-term systemic trust, as citizens witnessed the fragility of financial markets and the need for state intervention to prevent collapse.

Key Information

Confidence in the Free Market Economy

• Net confidence in the free market economy has declined in most G7 countries.
• In Germany, confidence recovered slightly, reaching a net level of 0.35% by mid-2009, compared to 0.32% in 2007.
• In France, net confidence dropped to -21% in 2009, indicating a significant loss.
• In the US, UK, and Canada, there was a short-term increase in confidence, but long-term effects suggest a reduction in support for the free market economy.
• Italy and Japan show a similar pattern of initial confidence increase followed by a sharp decline.

Demand for Stronger State Regulation

• Increased demand for regulation is observed across the G7 and Japan.
• In the US, net confidence in a regulated free market economy rose from 23% in 2007 to 43% in 2008, with an overall increase of 36% from 2001 to 2008.
• In Europe, the net increase was 18% from 2007 to 2008, but only 10% from 2001 to 2009.
• In Japan, the net increase in demand for regulation was 54% from 2002 to 2008, contrasting with the decline in confidence in the free market economy.

Determinants of Confidence and Regulation Demand

• Unemployment is a key determinant of confidence in the free market economy, with a negative effect on net confidence.
• GDP growth is a key determinant of demand for regulation, with a negative association between GDP growth and regulation demand.
• Control variables such as private consumption and inflation also play a role, though their impact is less significant than unemployment and GDP growth.

Methodology

• The study uses panel data from the GlobeScan survey and macroeconomic variables from the OECD.
• Fixed-effects models are employed to estimate the relationship between economic indicators and public confidence.
• Time periods analyzed include the pre-crisis (2001–2007), crisis period (2007–2009), and post-crisis (2008–2009).
• The data pattern is adjusted to control for endogeneity by using the average of the two quarters before each confidence observation.

Conclusion

• The financial crisis has negatively impacted citizens' confidence in the free market economy, particularly in Europe and Japan, while the US showed a more complex pattern.
• Unemployment is the main driver of the decline in confidence, and GDP growth is the primary factor behind the increase in demand for regulation.
• The long-term consequences of the crisis may lead to a shift in public opinion towards more state intervention and redistributive policies in certain countries.
• The paper highlights the importance of systemic trust in maintaining the stability of free market economies and democratic institutions.