Voters’ versus policymakers’ attitudes towards unemployment and inflation

Abstract

Working with a sample of 13 European nations from 1960 to 1997, this paper compares voters’ and policymakers’ attitudes towards unemployment and inflation. It is thought that policymakers' beliefs about the behavior of the economy play an important role in determining electoral results since they influence voters' perceptions of what macroeconomic policy can achieve and which objectives it should pursue. Empirical work on vote functions shows that inflation is the most important determinant of electoral results and unemployment is the least important. Reasons for the emergence of a neo-liberal consensus among European policymakers are discussed and empirically tested. The spread of these conservative ideas and the willingness to achieve a monetary union are suggested as possible explanations for why governments go unpunished for the increase and persistence of unemployment in Europe.