Economic conditions and the popularity of West German parties: a survey

Abstract

Abstract. The empirical work concerning the relation between economic conditions and the popularity of parties in the Federal Republic of Germany is surveyed. Research in this area started in 1971. During the first ten years (only) traditional econometrics were used. It was shown that the lower unemployment and/or inflation, the higher – ceteris paribus – the popularity of the leading party in government. In the 1980s, using modern time series methods, the validity of the earlier results has been questioned. However, it has been shown that such a relation can also be detected using modern time series techniques. Finally, it is asked whether the observed voting behaviour is consistent with the theory of rational expectations. Using popularity data, the hypothesis of rational expectations can be rejected. Thus, West German voters do not behave rationally in the sense used by Muth.