Learning, political attitudes and crises: Lessons from transition countries.

Summary This paper illustrates the sensitivity of political attitudes to the business cycle. It shows how the 2008 economic crisis has reshaped individual support for democracy and market liberalization in post-transition countries. Pro-reform attitudes have lost ground between 2006 and 2010 in Central and Eastern European countries that were hit by a negative economic shock. By contrast, they have increased in the CIS. Although on average, individual exposure to the crisis is associated with lower support to democracy and markets, it drives the demand for liberal reforms among groups of the population that were most excluded from the political-economic system in place, the youth particularly, in countries that lag behind in terms of liberalization and, where institutions are corrupt. We propose an interpretation of these evolutions in terms of learning and updating of beliefs.