During the euro crisis policy-makers tried to re-establish credibility with austere budgets. Studies of austerity have been plagued by measurement and endogeneity problems. We provide a direct test of the effect of austerity on confidence by calculating the immediate impact of austere budgets on government bonds. We build a unique database of budget dates and conduct event studies of 223 (future) Eurozone budgets. Since austere budgets are enacted in particular circumstances, we use a treatment effects design to measure markets' responses. Our findings are discouraging for the argument that austerity can provide a positive credibility shock. Markets do not welcome austerity. On the contrary, austere budgets are associated with substantial interest rate increases. These results underline how constrained governments are in debt crises.

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An influential literature predicts that incentives to provide local public goods are conditioned by how electoral systems expose a legislator to the need to seek a personal vote. Carey and Shugart theorize that district magnitude and ballot type interact affecting the legislators’ personal vote-seeking behavior. Another literature challenges the idea that electoral systems affect the behavior of legislators, particularly in highly clientelist settings, usually associated with high poverty. I empirically evaluate these arguments on an original data set of local goods bills presented by legislators of the National Congress of Honduras between 1990 and 2009. Honduras changed its electoral system from closed-list to open-list in 2004 while keeping its district magnitude constant. The results suggest that the Ballot Type × District Magnitude interaction does not affect the behavior of legislators in small magnitude constituencies, where poverty is more significant. However, support for the hypotheses is found in the largest, more developed constituency where M is equal to twenty-three seats.

This chapter studies presidential term limits—understood as limits on presidential re-elections and term lengths—in four Central American electoral democracies: Costa Rica, El Salvador, Guatemala, and Honduras. Its contribution is threefold. First, it explains the evolution of these institutions as part of the political development process of these polities after independence from Spain. Second, the chapter conducts two emblematic case studies of the politics of recent term limits reforms in Latin America via constitutional reviews: Costa Rica (1999–2003) and Honduras (2009 and 2015). Finally, it examines the consequences of term limits for democracy and policymaking. In this regard, it argues that term lengths affect policymaking in Costa Rica and Honduras, and that the political institutions in these countries combined with the popularity of ex-presidents make presidential re-elections possible. In contrast, in El Salvador and Guatemala the influence of term limits is offset by formal and informal constraints.

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