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Political parties’ ideological bias and convergence in economic outcomes

Author

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  • Hashim, Zeeshan
  • Fidrmuc, Jan
  • Ghosh, Sugata

Abstract

In democracies, policies are jointly shaped by voters' preferences and politicians' (or parties’) ideological biases. We explore the relative importance of the latter on some key economic outcomes – growth rate, inflation and inequality – in a broad sample of 71 democracies from 1995 to 2019. We find evidence that both left-wing and right-wing governments deliver convergent outcomes as regards growth, inflation and inequality. The same applies to the policy outcome of economic freedom. This indicates that consolidated democracies maintain continuity in economic policies, and a change in government from one political ideology to another with a different ideology does not significantly alter economic policy outcomes. However, we find divergence in hybrid regimes; inequality and economic freedom are reduced under leftist governments, and economic freedom is enhanced by rightist governments.

Suggested Citation

  • Hashim, Zeeshan & Fidrmuc, Jan & Ghosh, Sugata, 2025. "Political parties’ ideological bias and convergence in economic outcomes," European Journal of Political Economy, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:poleco:v:87:y:2025:i:c:s0176268025000291
    DOI: 10.1016/j.ejpoleco.2025.102669
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    Keywords

    Political parties; Ideology; Economic growth; Inflation; Inequality; Economic freedom;
    All these keywords.

    JEL classification:

    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H10 - Public Economics - - Structure and Scope of Government - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P50 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - General

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