The electoral impact of unexpected inflation and economic growth

This article supports two theoretical changes to models of comparative econ omic voting. The first is that the distinction between expected and unexpec ted components of inflation and economic growth is important. We posit that Voters are primarily concerned with unexpected inflation and unexpected gr owth since these changes have real income effects and serve as better indic ators of government competence. Empirical analyses of data from nineteen in dustrialized nations in 1970-94 reveal stronger electoral effects for the u nexpected components of inflation and growth than for their overall levels. The second innovation is the relaxation of the assumption of homoscedastic ity, which led to the finding that the relationship between economic factor s and incumbent vote has become more volatile over time and is less volatil e when policy-making responsibility is more obscured.