The Great Recession has reinvigorated the fear at least present since the demise of the Weimar Republic that the economic pain normally following financial crises threatens democracy through increased political polarization and government instability. I assess this concern through a quantitative analysis of electoral and parliamentary polarization and government instability in the developed world from 1960 to 2012. Using new measures of government and parliamentary conflict, I demonstrate that debt restructuring shortens the lifetime of cabinets despite allegations to the contrary. The impact of parliamentary polarization is, by contrast, negligible, and other economic conditions do not exert a direct influence on government stability.
