ABSTRACT A well-studied hypothesis in the political economy literature is that economic globalisation leads to the convergence of economic policies because of increasing international constraints. However, little is known about how parties adapt their policy positions during economic crises. This paper investigates parties’ policy shifts in economically harsh times. It highlights the important distinction between long-term trends (e.g., economic integration) and relatively short-term economic fluctuations when studying party competition. During economic downturns parties have an incentive to intensify the debate on economic policies and emphasise their distinct policy positions. In other words, parties strategically position themselves on salient issues. The empirical analysis combines party manifesto data with macro-economic indicators and survey data from 28 European countries between 1980 and 2021. The findings show that party polarisation increases when the economy is in decline, and positions converge during economic recovery. Further analyses explore the mechanism and reveal an indirect effect: parties adjust their policy positions in reaction to changing voter priorities and grievances in times of economic distress. Overall, the article contributes to a larger literature on party competition and political responsiveness by showing that external shocks, such as economic crises, influence the diversity of political offers among established parties.
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