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Does the World Economy Swing National Elections?

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  • Andrew Leigh

Abstract

Do voters reward national leaders who are more competent economic managers, or merely those who happen to be in power when the world economy booms? According to rational voting models, electors should parse out the state of the world economy when deciding whether to re-elect their national leader. I test this theory using data from 268 democratic elections held between 1978 and 1999, comparing the effect of world growth (“luck”) and national growth relative to world growth (“competence”). In the preferred specification, which allows for countries to have different degrees of global integration, an extra percentage point of world growth boosts incumbents’ chances of re-election by 9 percent, while an extra percentage point of national growth relative to world growth only boosts an incumbent’s chances of re-election by 4 percent. Voters are more likely to reward competence in countries that are richer and better educated. Controlling for income, higher rates of newspaper readership reduce the returns to luck, while higher rates of television viewing reduce the returns to competence.

Suggested Citation

  • Andrew Leigh, 2004. "Does the World Economy Swing National Elections?," CEPR Discussion Papers 485, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  • Handle: RePEc:auu:dpaper:485
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    File URL: https://www.cbe.anu.edu.au/researchpapers/cepr/DP485.pdf
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    References listed on IDEAS

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    Cited by:

    1. Fredrik Carlsson & Olof Johansson-Stenman, 2010. "Why Do You Vote and Vote as You Do?," Kyklos, Wiley Blackwell, vol. 63(4), pages 495-516, November.
    2. Gebhard Kirchgässner, 2016. "Voting and Popularity," CESifo Working Paper Series 6182, CESifo Group Munich.
    3. Paul J. Burke & Andrew Leigh, 2010. "Do Output Contractions Trigger Democratic Change?," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(4), pages 124-157, October.
    4. Rosa C. Hayes & Masami Imai & Cameron A. Shelton, 2015. "Attribution Error In Economic Voting: Evidence From Trade Shocks," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 258-275, January.
    5. Amy King & Andrew Leigh, 2009. "Beautiful Politicians," Kyklos, Wiley Blackwell, vol. 62(4), pages 579-593, November.
    6. Burke Paul J., 2012. "Economic Growth and Political Survival," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-43, March.
    7. repec:aea:aejmic:v:9:y:2017:i:2:p:54-75 is not listed on IDEAS
    8. John Maloney & Andrew Pickering, "undated". "Voting and the macroeconomy: separating trend from cycle," Discussion Papers 11/14, Department of Economics, University of York.
    9. Cáceres, Neila & Malone, Samuel W., 2015. "Optimal Weather Conditions, Economic Growth, and Political Transitions," World Development, Elsevier, vol. 66(C), pages 16-30.
    10. Cáceres, Neila & Malone, Samuel W., 2013. "Forecasting leadership transitions around the world," International Journal of Forecasting, Elsevier, vol. 29(4), pages 575-591.
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    13. Prato, Carlo & Wolton, Stephane, 2014. "The Voters' Curses: The Upsides and Downsides of Political Engagement," MPRA Paper 53482, University Library of Munich, Germany.
    14. Harry Garretsen & Janka I. Stoker & Rob Alessie & Joris Lammers, 2014. "Simply a Matter of Luck & Looks? Predicting Elections when Both the World Economy and the Psychology of Faces Count," CESifo Working Paper Series 4857, CESifo Group Munich.
    15. John Maloney & Andrew Pickering, 2008. "Ideology, Competence and Luck: What determines general election results?," Bristol Economics Discussion Papers 08/607, Department of Economics, University of Bristol, UK.
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    18. Simonovits, Gábor, 2010. "A gazdasági integráció hatása a kormányzati elszámoltathatóságra
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      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 980-993.
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    20. Cole, Shawn & Healy, Andrew & Werker, Eric, 2012. "Do voters demand responsive governments? Evidence from Indian disaster relief," Journal of Development Economics, Elsevier, vol. 97(2), pages 167-181.
    21. Paul Collier & Anke Hoeffler, 2009. "Democracy's Achilles Heel or, How to Win an Election without Really Trying," Economics Series Working Papers CSAE WPS/2009-08, University of Oxford, Department of Economics.
    22. Carlos Seixas & António Brandão & Manuel Luís Costa, 2013. "Policy Choices by an Incumbent - A Case with Down-Up Problem, Bias Beliefs and Retrospective Voting," FEP Working Papers 485, Universidade do Porto, Faculdade de Economia do Porto.
    23. Ivo Bischoff & Lars-H. Siemers, 2013. "Biased beliefs and retrospective voting: why democracies choose mediocre policies," Public Choice, Springer, vol. 156(1), pages 163-180, July.
    24. Carlos Viana de Carvalho & Eduardo Zilberman & Ruy Ribeiro, "undated". "Sentiment, Electoral Uncertainty and Stock Returns," Textos para discussão 655, Department of Economics PUC-Rio (Brazil).
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    More about this item

    Keywords

    rational voting; elections; growth; media;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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