Impact of Macroeconomic Conditions on Government Popularity: An Ecowas Investigation

Abstract

A main focus of this paper is our analysis of the vote function using the vote share of government parties as the proxy variable for government popularity. Utilising Pedroni's (1999 ) panel cointegrated test and the fully modified OLS (FMOLS) technique, we empirically examine the long-run co-movement relationship in a bivariate model between government popularity and macroeconomic outcomes as well as a lag term in accordance with updated data for 11 countries of the Economic Community of West African States (ECOWAS) during the 1975-2005 period. The results indicate the existence of panel cointegration relationships in our empirical model. The panel FMOLS shows that several macroeconomic shocks are responsible for positive contributions to government popularity, especially in regard to economic growth and government expenditures. By contrast, currency depreciation, higher interest payments, and a greater taxation burden on households all contribute to lower government support in our sample countries. Based on such evidence, important policy implications emerge for ECOWAS. Copyright (c) 2009 The Authors. Journal compilation (c) 2009 Economic Society of South Africa.