Abstract: We document that fiscal multipliers in the euro area are largely resilient to population aging, in contrast to evidence from the U.S. The reason is that aging only erodes fiscal multipliers where fiscal shocks pass through strongly to the incomes of younger, credit-constrained households -- a transmission that generous unemployment insurance systems in the euro area largely mute. Consistent with this mechanism, euro area regions with low unemployment benefits do exhibit an aging-related erosion of fiscal multipliers, reminiscent of the U.S. A New Keynesian model extended to incorporate age-heterogeneity quantitatively matches the empirical estimates of aging's effect on fiscal multipliers across both unemployment insurance regimes under standard parameterizations.

Abstract: I study the political consequences of monetary policy, focusing on incumbent vote shares in elections across 18 advanced economies since 1900. Using the trilemma of international finance to isolate exogenous variation in policy rates, I find that interest rate changes do not affect incumbent support. A counterfactual exercise for U.S. presidential elections shows the point estimate is economically negligible, flipping at most 2 of 32 elections even under sustained one-directional shocks. Exogenous monetary policy carries no electoral dividend for incumbents.