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Words speak louder than actions: The impact of politics on economic performance

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  • Osterloh, Steffen

Abstract

In this paper, a new approach to disclose the impact of politics on economic growth is presented: we use data derived from content analysis of party manifestos as measures of party preferences. In a panel of 23 OECD countries, we detect a positive impact of party support for various market-liberal policies on economic performance. In particular, we show that parties which were more concerned with market interventions and - to a lesser extent - welfare state policies impacted on growth negatively; those which proposed incentives for business as well as technology and infrastructure had a positive impact. Moreover, the robustness of the results is demonstrated in a model averaging framework.

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  • Osterloh, Steffen, 2010. "Words speak louder than actions: The impact of politics on economic performance," ZEW Discussion Papers 10-092, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:10092
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    1. Partiprogram och ekonomisk tillväxt
      by Niclas Berggren in Nonicoclolasos on 2010-12-28 09:57:18

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    1. Dominik Hecker & Dano Meiske & Niklas Potrafke & Marina Riem & Christoph Schinke, 2016. "Schuldenbremsen in den deutschen Bundesländern: Worte und Taten der Landesregierungen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(02), pages 14-22, January.
    2. Björn Kauder & Manuela Krause & Niklas Potrafke, 2018. "Electoral cycles in MPs’ salaries: evidence from the German states," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(4), pages 981-1000, August.
    3. François Facchini & Mickael Melki, 2014. "Political Ideology And Economic Growth: Evidence From The French Democracy," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1408-1426, October.
    4. Brech, Viktor & Potrafke, Niklas, 2014. "Donor ideology and types of foreign aid," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 61-75.
    5. Osterloh, Steffen, 2018. "How do politics affect economic sentiment? The effects of uncertainty and policy preferences," Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181614, Verein für Socialpolitik / German Economic Association.
    6. Marina Riem, 2016. "Does political uncertainty influence firm owners‘ business perceptions?," ifo Working Paper Series 226, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    7. Potrafke, Niklas, 2017. "Partisan politics: The empirical evidence from OECD panel studies," Journal of Comparative Economics, Elsevier, vol. 45(4), pages 712-750.
    8. Georgios Magkonis & Vasileios Logothetis & Kalliopi-Maria Zekente, 2019. "Does the Left Spend More?," Working Papers in Economics & Finance 2019-03, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.
    9. François Facchini & Mickael Melki, 2014. "Political Ideology And Economic Growth: Evidence From The French Democracy," Economic Inquiry, Western Economic Association International, vol. 52(4), pages 1408-1426, October.
    10. Niklas Potrafke & Marina Riem & Christoph Schinke, 2016. "Debt Brakes in the German States: Governments’ Rhetoric and Actions," German Economic Review, Verein für Socialpolitik, vol. 17(2), pages 253-275, May.
    11. Alexander Libman, 2015. "Words or deeds: what matters? On the role of symbolic action in political decentralization," Empirical Economics, Springer, vol. 49(3), pages 801-838, November.
    12. Belloc, Filippo & Nicita, Antonio & Sepe, Simone M., 2014. "Disentangling liberalization and privatization policies: Is there a political trade-off?," Journal of Comparative Economics, Elsevier, vol. 42(4), pages 1033-1051.
    13. Pál Czeglédi & Carlos Newland, 2018. "How Is The Pro†Capitalist Mentality Globally Distributed?," Economic Affairs, Wiley Blackwell, vol. 38(2), pages 240-256, June.

    More about this item

    Keywords

    economic growth; political economy; ideology; panel data; model averaging;

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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