The effect of election outcome on economic activity: A tale of two countries

This paper investigates the effect of partisan politics on macroeconomic performance in France and the United Kingdom between 1971-2023. Using a panel autoregressive distributed lag (ARDL) model, it examines whether ideological divides between left- and right-wing parties and coalition governments relate to accountability for key macroeconomic indicators. Results suggest that economic growth is slightly lower under the left-wing governments, whereas unemployment and inflation rates are higher with a statistically significant difference of 10% for inflation. Furthermore, coalition governments underperform on growth and unemployment, struggling to stimulate economic expansion. Finally, despite the characterization of political parties as either right or left leaning in terms of cultural matters, their implemented economic policies seem to yield comparable economic outcomes.