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The Lost Popularity Function: Are Unemployment and Inflation no longer Relevant for the Bahaviour of German Voters?

  • Gebhard Kirchgässner

Up to now there was a general conviction that increasing unemployment and inflation have a negative impact on the government’s popularity. This was true for Germany as well, but it does not seem to hold any longer. This paper first reviews the results of earlier periods before presenting new results for the last part of the Kohl government after unification and for the Schröder government. While the results for the former show the known pattern, neither unemployment nor inflation is significant in the equations of the Schröder government, the latter has even the wrong sign. The missing impact of unemployment might be due to statistical reasons: the short observation period and the low variance of the explanatory variables. With respect to inflation, however, the citizens might have recognised that they cannot any longer hold the government responsible as the European Central Bank is performing monetary policy in Europe since 1999 and is, therefore, also responsible for price stability in Germany.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2882.

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Date of creation: 2009
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Handle: RePEc:ces:ceswps:_2882
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  1. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Vaubel, Roland, 1997. "The bureaucratic and partisan behavior of independent central banks: German and international evidence," European Journal of Political Economy, Elsevier, vol. 13(2), pages 201-224, May.
  3. Engle, R. F. & Granger, C. W. J. (ed.), 1991. "Long-Run Economic Relationships: Readings in Cointegration," OUP Catalogue, Oxford University Press, number 9780198283393, July.
  4. Nannestad, Peter & Paldam, Martin, 1994. " The VP-Function: A Survey of the Literature on Vote and Popularity Functions after 25 Years," Public Choice, Springer, vol. 79(3-4), pages 213-45, June.
  5. Muller, Ulrich K., 2005. "Size and power of tests of stationarity in highly autocorrelated time series," Journal of Econometrics, Elsevier, vol. 128(2), pages 195-213, October.
  6. van Riel, Arthur & Schram, Arthur, 1993. "Weimar Economic Decline, Nazi Economic Recovery, and the Stabilization of Political Dictatorship," The Journal of Economic History, Cambridge University Press, vol. 53(01), pages 71-105, March.
  7. Frey, Bruno S. & Schneider, Friedrich, 1981. "Central bank behavior : A positive empirical analysis," Journal of Monetary Economics, Elsevier, vol. 7(3), pages 291-315.
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