Conventional wisdom asserts that economic conditions are closely linked to election outcomes. Bill Clinton turned this conventional wisdom into a cliché when, as a candidate in the 1992 American presidential election, he had his campaign staff put up a banner that hung across their campaign headquarters emblazoned with the words “It's the economy, stupid!” This conventional wisdom is supported by much academic research. At least since the 1930s, voters in a variety of democratic countries have tended to hold governments accountable for bad economic times, reducing their support for parties holding government office in conditions of high unemployment or inflation or of low economic growth (Tufte 1978; Chrystal and Alt 1981; Hibbs 1977; Fair 1988; Lewis-Beck 1988; Markus 1988, 1992; Erikson 1989; Mackuen, Erikson, and Stimson 1992; Nadeau and Lewis-Beck 2001; Dorussen and Taylor 2002). These general findings hold whether the effects of economic conditions are modeled in terms of votes for government parties (generally referred to as “vote functions”) or in terms of government standing (generally referred to as “popularity functions”).

But it is clear that the economy does not always determine either government popularity or vote shares. In the American presidential election of 2000, Al Gore failed to win decisively as the incumbent party standard bearer despite a booming economy. In the Netherlands in 2002, all three members of the governing coalition lost votes in similarly excellent economic conditions. In Britain and Ireland in 1997, ruling parties also failed to win reelection despite booming economies.