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Elections, Economic Outcomes and Policy in Canada: 1870 - 2015

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Abstract

In this paper we examine the relationship between economic and electoral outcomes in Canada since Confederation (1867) and the role that economic policy has played in influencing this relationship. The results are consistent with voter concern for the overall performance of the economy in the incumbent’s governing term—the average growth rate of per capita GDP and average unemployment rate—while rejecting the presence of a political business/budget cycle response in the period leading into an upcoming election. Evidence for the effect of performance on the stability of the political party system (as measured by party vote volatility) is even stronger. The data also are consistent with the use of policy for countercyclical stability (primarily through spending and deficits), fiscal response to voter turnout, the growth of both spending and deficits under larger governing majoritiesand compliant monetary response to fiscal deficits.

Suggested Citation

  • J. Stephen Ferris & Marcel-Christian Voia, 2019. "Elections, Economic Outcomes and Policy in Canada: 1870 - 2015," Carleton Economic Papers 19-11, Carleton University, Department of Economics.
    • Handle: RePEc:car:carecp:19-11
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    More about this item

    Keywords

    economic and electoral outcomes; political business cycle; political influences on policy; policy endogeneity; seemingly unrelated regressions;
    All these keywords.

    JEL classification:

    • Z18 - Other Special Topics - - Cultural Economics - - - Public Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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