During the international financial and economic crisis of 2008–2010 all OECD member states were facing similar albeit varying challenges. However, their reactions to the crisis greatly differed. While many states passed extensive economic stimulus packages, others solely relied on a restrictive fiscal policy even in times of economic crisis. The composition of the fiscal packages also greatly varied. While some states increased public expenditure and expanded state investments, others enacted considerable tax reductions, thus focusing on an economic stimulus by forgoing public revenue.
This paper aims to identify the main political determinants of the different fiscal policy reactions of the OECD member states to the economic crisis. The centerpiece of the comparative analysis consists of political economic determinants of the size and composition of the fiscal packages. A fuzzy-set Qualitative Comparative Analysis serves to identify the driving forces behind the fiscal policy reactions to the crisis. The conditions are derived from partisan political theory and the “Varieties of Capitalism” approach while other factors are controlled for.