How much does the state of the economy influence the popularity of Austrian parties? an empirical investigation

In the 1970s and 1980s we observed a first wave of popularity and vote functions, which had been estimated for almost all highly developed OECD countries. In the last ten years the vote and popularity functions gained a certain revival with studies for Germany by Kirchgässner (2009) and for Denmark by Paldam (2004) with partly amazing and new findings: The economic situation has much less influence on popularity as compared to the first waves of studies, where the majority of these investigations showed a highly statistically significant and quantitatively important effect of the unemployment rate, the rate of inflation and the growth rate of income on the popularity and/or on the election outcomes. Our paper takes up this issue, and after the earlier studies of Neck, Karbuz and Hofreither a  second attempt is made to undertake an empirical investigation into how much the economic situation influences the popularity of Austrian parties. Additionally, our study is a first attempt to estimate the influence of the economic situation on election outcomes in Austria in the 86 election districts at the federal elections in 1999, 2002, 2006 and 2008. We also find that the influence of the economic situation is mixed and gets less important the more recent the elections are.

We estimate popularity functions for the Austrian parties OeVP (Austian Peoples Party), SPOe (Social Democratic Party of Austria), FPOe (Freedom Party of Austria) over 1987 to 2010 (using annual data) as well as vote functions of the same Austrian parties for the national elections in 1999, 2002, 2006 and 2008 using the 86 election districts. In most cases we find a statistically significant and theoretically predicted influence of the economic variables unemployment rate, inflation rate and growth rate of income. However, this influence is not robust and shows a tendency to decline over time.