United by the Economy, Divided by Convictions: Is the Economic Vote Affected by Polarisation in Latin America?

This paper examines how political polarisation conditions the relationship between economic performance and electoral outcomes. While a large literature shows that voters tend to reward incumbents for good economic conditions and punish them for poor performance, these effects are far from universal, as polarisation functions as a contextual moderator of economic voting by altering how voters interpret economic information. We develop a formal theoretical model in which increasing polarisation expands the share of voters who are unresponsive to economic performance, reducing the economic accountability of voting. We test the model's predictions using data from 62 presidential elections in 16 Latin American countries between 1994 and 2019. The empirical analysis shows that public spending increases and inflation decreases incumbent reelection probability in low-polarisation contexts, consistent with standard economic voting models. However, these effects weaken significantly as polarisation rises and become statistically insignificant at high levels of polarisation. These findings suggest that polarisation systematically reshapes the mechanisms of electoral accountability by reducing voters' responsiveness to economic conditions. More broadly, the results highlight a trade-off inherent in democratic competition: while some degree of political polarisation may structure political choice, excessive levels of polarisation undermine the capacity of elections to discipline incumbents based on performance.