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Although there is wide recognition of the negative consequences of policy volatility for countries' long-term economic growth, there is limited empirical work on this subject. One of the reasons is the difficulty of measuring policy volatility over long periods of time, especially in developing countries. This paper contributes to this literature by constructing a proxy for policy volatility that exploits the information content of the priorities conveyed in presidential speeches. The study creates a policy volatility measure using a Latent Dirichlet Allocation algorithm on a novel data set of 953 presidential speeches in 10 Latin American countries and Spain. The paper shows that the proxy for policy volatility is negatively correlated with long-term growth over 1940-2010. The results are robust to a large set of changes in the construction of the proxy for policy volatility.
Consumption --- Economic Growth --- Economic Theory & Research --- Economics and Institutions --- Fiscal & Monetary Policy --- Governance --- Industrial Economics --- Macroeconomics and Economic Growth --- Non-Governmental Organizations --- Policy Stability --- Political Economy --- Presidential Speeches --- Public Sector Management and Reform --- Technology Industry --- Technology Innovation --- Text Mining
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This study uses text mining techniques on almost 900 presidential "state-of-the-union"-type speeches from 10 Latin American countries from 1819 to 2016. The paper documents a sharp increase in recent decades in references to poverty and inequality. The study's long-term view shows that the way in which poverty and inequality are discussed has been changing. Using a Latent Dirichlet Allocation algorithm, the paper shows that in recent years poverty has been increasingly discussed as a broader multidimensional challenge that requires a variety of social programs. Inequality has been increasingly framed as an issue of equal opportunities, whereas previously there was a greater focus on social justice. The paper assesses whether the prevalence of poverty and inequality in presidential speeches correlates with measures such as social public spending, as well as the poverty and inequality levels of the country. It finds that during the 2000s, the countries that discussed poverty and inequality at greater length were also the ones that increased social spending and reduced poverty and inequality the most.
Consumption --- Economics and Institutions --- Fiscal & Monetary Policy --- Inequality --- Macroeconomics and Economic Growth --- Non-Governmental Organizations --- Poverty --- Poverty Reduction --- Presidential Speeches --- Public Sector Management and Reform --- Technology Industry --- Technology Innovation --- Text Mining
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