The Impacts of Economic Growth and Decline on Party Behavior

Project Information

ECONPARTY

Grant agreement ID: 892779

DOI

10.3030/892779

Project closed

EC signature date 20 April 2020

Start date 1 September 2021

End date 14 September 2024

Funded under

• EXCELLENT SCIENCE - Marie Skłodowska-Curie Actions

Total cost

€ 203 852,16

EU contribution

€ 203 852,16

Coordinated by

LUNDS UNIVERSITET
Sweden

Periodic Reporting for period 1 - ECONPARTY (The Impacts of Economic Growth and Decline on Party Behavior)

Reporting period: 2021-09-01 to 2023-08-31

Summary of the context and overall objectives of the project

It is well known that the economy shapes the electoral prospects of political parties: voters punish incumbent parties for a bad economy and reward them for a good one. But how do parties react to the economy? This question is theoretically and normatively important. Parties are the main vehicles for representing citizens' interests in democracies, and these interests are in part shaped by the economy. As such, it is important to investigate how parties respond to periods of economic improvement and decline, particularly the obstacles that parties face when attempting to win elections and the types of issues that parties end up addressing. Once we uncover the relationship between economic conditions and parties' policy positions, citizens will be able to better gauge how well their political representatives advocate for their interests and preferences, as well as whether and how parties shape the preferences of citizens during economic decline and improvement. Yet, despite the theoretical and normative implications for democratic representation, there are only few existing works that address this question, and most of them examine how parties combat economic downturns by changing their positions on the economy or altering their emphasis on economic issues.

ECONPARTY's main objective is to illuminate how parties pick and choose the issues they promote, as well as the positions they take on these issues, during both economic decline and growth. It does so by using an original, interdisciplinary, and cross-country comparative approach. The findings reveal how the economy affects democratic representation. Because parties' electoral prospects are an important component of the project's theoretical thread, I first uncovered how citizens cast their votes during economic decline and improvement. Next, I examine parties' electoral strategies during both bad and good economic times. These findings are packaged into five research articles.

Work performed from the beginning of the project to the end of the period covered by the report and main results achieved so far

I first conducted a comprehensive literature review of the current research on parties' electoral strategies and how voters perceive the national economic condition. Next, I formulated the following five research questions, developed hypotheses for them, tested them empirically, and packaged them as five research articles.

1. How does the national economic condition affect voters’ behavior during elections? I find that when the per capita GDP growth rate becomes negative (i.e. when the economy contracts), when the unemployment rate increases, or when inflation becomes higher, voters are more likely to vote and vote for opposition parties – this is the case even for supporters of the head of government’s party. In contrast, voters become less likely to vote when the economy. For those who vote, they are more likely to vote for the head of government’s party – this is the case even for supporters of opposition parties.
2. Do voters reward coalition parties for government-ending conflicts? This question is relevant for understanding how, in the coalition setting, the economic condition shapes the electoral strategies of the prime minister’s party and junior coalition partners. I find that voters reward junior coalition partners who break away from the government due to policy disagreement, while the prime minister’s party is not punished for this type of government dissolution. In contrast, when the government dissolves due to non-policy conflicts, such as personal infighting or scandals, the party responsible for these conflicts are punished at the polls.
3. Under rosy economic conditions, how do the policies that junior coalition partners promote affect their performance in elections? I find that when the per capita GDP growth rate is positive, junior coalition partners win votes if they promote non-economic issues, and do so to a greater degree than the prime minister’s party does.
4. Under rosy economic conditions, how can opposition parties win votes? I find that surprisingly, changing their positions on and attention to issues do not earn opposition parties more votes.
5. Under economic decline, how do the policies that the head of government’s party promote affect the party’s performance at the polls? I find that this type of party, particularly left-leaning ones, can win votes by promoting issues related to traditional morality, law and order, and nationalism, and emphasizing these issues more than other parties do.

The research article on government-ending conflicts, is published in the American Political Science Review. The remaining four articles, currently as working papers, have been presented international conferences and workshops, and invited talks. I will submit them to international political science journals.

Progress beyond the state of the art and expected potential impact (including the socio-economic impact and the wider societal implications of the project so far)

The results of ECONENGAGE go beyond the current state of the art and have important implications for the quality of democratic representation as well as societal relations. ECONPARTY has uncovered which specific types of issues can win votes during economic decline and during economic improvement, and by which types of parties (opposition, junior coalition partners, and the head of government’s party). The results offer several important insights. First, in a good economy, unless the head of government’s party messes up during election campaigns, there is little that they can do to win votes. Second, the implication is that policy innovation during economic growth does not yield electoral fruit. At the very least, in good economic times, voters do not seem to care what opposition parties have to offer. Third, when the economy declines, a left-leaning head of government’s party can win votes by promoting traditional morality, nationalism, and law and order issues. This finding suggests that economic downturn threatens societal divisions, particularly if the country is governed by a left-leaning head of government’s party, and this threat comes from political elites.

The project’s investigation into the electoral consequences of government terminations is the first attempt to examine the electoral consequences of conflictual government terminations. The results suggest that rather than engaging in compromises and consensus-building, junior coalition partners can in fact enhance their electoral prospects by leaving the government when a policy conflict arises, with downstream consequences on government instability. If voters do not punish government terminations due to policy conflicts, coalition parties have more incentive to avoid compromise and would instead push for their preferred policies to be enacted – even if doing so would mean government dissolution. Since breakdown interrupts governance, the implication is that even if coalition parties can faithfully represent the preferences of their supporters, the quality of governance may become lower. For one, parties would have less incentive to enact policies that benefit the whole of society instead of legislating policies that mainly benefit their party supporters. For another, more frequent government breakdown suggests that it becomes more difficult for governments to legislate policies that require long-term horizon, particularly bigger, more innovative policies that take longer to show results.

Political Economy and Behavior Workshop, participants (September 2024)