Government competence, economic performance and endogenous election dates

Abstract

Empirical research in comparative politics has largely demonstrated that favorable economic conditions improve the electoral fortunes of incumbent government parties. Thus, in parliamentary democracies in which the government can choose when to call an election there is an incentive for government parties to act strategically by calling early elections when economic conditions are favorable. Alesina, Cohen and Roubini, however, cast doubt on this proposition, finding only weak evidence of a relationship between economic factors and election timing. In this paper, we reconsider the relationship between economic conditions and endogenous election dates using new data, controlling for political factors, and applying more appropriate econometric techniques. From analyses of twelve parliamentary democracies, we find that macroeconomic performance and political context exert significant influence on election timing. All other factors being equal, better performances in terms of economic growth, inflation, and unemployment will make a government more likely to call an early election. Controlling for government ideology, we find that right-wing governments are more sensitive to inflation performance while left-wing governments are more sensitive to the level of unemployment.