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Voting functions in the EU-15

Abstract

This paper examines whether the European integration process, by transferring policy instruments to supra-national authorities, has affected voters’ evaluations of governments’ economic performance at elections. The analysis is implemented on a panel of 15 EU countries, from 1970 to 2011. Results suggest that before the Maastricht Treaty, citizens held incumbents responsible for GDP growth and for the evolution of inflation, particularly when measured relative to the EU average. After the Maastricht Treaty, there was a significant reduction in the impact of economic variables, especially inflation, on electoral outcomes. During the current economic crisis the capacity to control the budget deficit appears to be the main determinant of incumbents’ vote shares.

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Notes

  1. For surveys of economic voting see Nannested and Paldam (1994), Paldam (2004), Brug et al. (2007), and Duch and Stevenson (2008).

  2. Note that the dependent variable is bounded between 0 and 1 but not censored. According to Maddala and Lahiri (2009), it would be inappropriate to apply the censored normal model, or Tobit model, to data having those two properties.

  3. Otherwise, with unbounded independent variables the estimated model may predict a proportion of votes that lies outside of the [0,1] boundaries.

  4. See, among others, Dubin and Kalsow (1996), Aguiar-Conraria and Magalhães (2010), and Martins and Veiga (2013).

  5. See, among others, Paolino (2001), Ferrari and Cribari-Neto (2004), Kieschnick and McCullough (2003) and Smithson and Verkuilen (2006).

  6. For fixed μ, the larger is the value of ϕ, the smaller is the variance of y.

  7. Estimations were obtained using Stata software, version 12.0. The code for the fractional logit was adapted from Papke and Wooldridge (2008), available at Papke’s web page: http://econ.msu.edu/faculty/papke/index.php.

  8. Although the cyclically adjusted primary budget balance would be more adequate for monitoring the fiscal stance of the country, the budget balance is more easily followed by the general public.

  9. In the Danish election of 1973, the vote shares of the four main parties fell by more than 30 percentage points and the number of parties represented in parliament doubled, from 5 to 10. After the election, the third most voted party (Venstre) formed a small minority government, supported by five other parties.

  10. An F-test rejects the hypothesis of the country dummies being jointly insignificant. The result of a Hausman test reveals that the fixed effects model is preferable to the random effects model. The Arellano-Bond tests for first- and second-order autocorrelation do not allow the rejection of the null hypothesis of no auto-correlation (p-values of 0.48 and 0.19 respectively).

  11. The results for the generalized estimating equation are very similar. To facilitate comparison with the previous methods, we report the results for the Bernoulli quasi-MLE procedure only.

  12. The marginal effects of each explanatory variable were calculated while holding the other variables at their mean values. The marginal effect is the change in the predicted dependent variable for a unit change in the explanatory variable, assuming that the effect does not change over that interval.

  13. Changes in the budget surplus were also tested but turned out not to be statistically significant.

  14. Unemployment rates, changes in unemployment and differences from EU averages were also tried in the regressions, but rarely turned out as statistically significant. Furthermore, the number of observations on the unemployment rate is substantially smaller than those for the other explanatory variables (see Appendix A), thus reducing the number of degrees of freedom of the estimations.

  15. The ratio of the estimated marginal effects of a one-percentage drop in GDP and time in office is (0.01×0.4)/0.001=4.

  16. In our model, both the Breusch-Pagan test and a modified Wald statistic for heteroscedasticity in the residuals reject the null hypothesis of homoscedasticity.

  17. For Austria, Finland and Sweden, the dummy for the post-Maastricht period starts assuming the value of one only in 1995, when these countries joined the European Union.

  18. The results for the proportion of votes cast for the main party are very similar. They are available from the author upon request.

  19. In the sample (see Appendix B), the average for the deficit as percentage of GDP during the period 2008–2011 was 5.98 %, much higher than the average for the overall sample (2.91 %).

  20. Financial assistance to Spain currently involves the banking system only. While this paper was being revised, a financial assistance program was also approved for Cyprus (on March 2013).

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Acknowledgements

The author thanks Francisco Veiga, Miguel Portela, Luis Aguiar-Conraria, participants at the Martin Paldam Workshop and two anonymous referees for valuable comments. The financial support provided by the Portuguese Foundation for Science and Technology (FCT), under research grant PTDC/EGE-ECO/118501/2010 (partially funded by FEDER) is gratefully acknowledged. The article also benefited from the efficient research assistance of Hélder Alves.

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Correspondence to Linda Gonçalves Veiga.

Appendices

Appendix A

Table 6 Elections and first quarter of economic variables

Appendix B: Averages for economic variables by time periods (Tables 7 and 8)

Table 7 Whole sample
Table 8 Portugal, Ireland, Greece and Spain

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Gonçalves Veiga, L. Voting functions in the EU-15. Public Choice 157, 411–428 (2013). https://doi.org/10.1007/s11127-013-0113-7

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Keywords

  • Vote functions
  • EU-15
  • Economics
  • Deficits

JEL Classification

  • H6
  • D72
  • E6
  • F02