Voting behavior and the economy: evidence from Greece

This paper examines the relationship between Greek voters' behaviour and the economy, paying particular attention to the effect on two non-orthodox parties, Syriza and Golden Dawn. We use data based on actual vote-shares across 13 Greek peripheries from five general elections over the period 2000-2012. Our results are in accordance with the predictions of the punishment-sanctioning model, namely that incumbent parties are supported by voters in good times whereas voters deprecate them during bad times. In particular, we document that worsening economic conditions have led the Greek electorate to reduce support for traditional parties and move to non-traditional populist parties, like the left-wing Syriza and the ultra-nationalistic right-wing Golden Dawn. Yet we find an asymmetry between these two non-orthodox parties: while electorate support for Syriza is found to be strongly influenced by changes in GDP-growth and unemployment, this is not the case for Golden Dawn. Indeed, our estimates suggest that the increased electoral support for Golden Dawn has been mainly related to the forced fiscal-deficit cuts associated with Greece's bail-out program. This suggests that the Greek electorate does not believe that Golden Dawn can effectively address the country's major economic problems.