A recent NBER working paper by Alan de Bromhead, Barry Eichengreen and Kevin O’Rourke finds a link between the severity of economic contraction during the Great Depression and the share of votes for extremist political parties. They find that the link was strongest in economies with relatively short histories of democracy and where depressed economic conditions were permitted to persist.
The findings of this paper are undoubtedly pertinent for the ongoing EU crisis. Will the persistence of economic hard times result in the rise of anti-system extremist parties which attempt to undermine democracy? Will countries such as Italy, Spain, and Greece, which experienced dictatorships in the last century, be more prone to the rise of extremist parties? Notably, the first round of the French presidential election resulted in the largest ever vote for a National Front presidential candidate. Furthermore, in Ireland, support for Sinn Fein, which has a history of extreme nationalism as well as a history of bypassing democratic institutions, has grown in recent years as a result of austerity measures. Click here to read more on this.