To what extent are incumbent governments affected by the state of the economy when it comes to government stability and electoral performance? This paper investigates these research questions using a dataset on parties and governments for 17 West European and 10 Central Eastern European counties.
Previous research have found a rather weak general connection between the state of economy and government stability and electoral performance in Europe, although a stronger connection does appear in political contexts with certain responsibility structures. In this paper we further investigate the effect of institutional and contextual factors, but also argue that the effect of the state of economy on electoral performance and stability are linked to regional (or global) recessions trends. We hypothesize and test the theory that incumbent governments in European democracies are negatively affected by economic stagnation in the respective countries only when they are worse off than in comparable countries. That is, voters evaluate cabinet achievements in economic policy retrospectively in relation to regional (or global) recessions trends and the macroeconomic situation in other countries.
