LAUSR

ABSTRACT In this paper we examine the relationship between economic and electoral outcomes in Canada since Confederation (1867) and the role that economic policy has played in influencing this relationship. The results are consistent with voter concern for the overall performance of the economy in the incumbent’s governing term – the average growth rate of per capita GDP and average unemployment rate – while rejecting the presence of a political business cycle. Evidence of an effect of performance on the stability of the political party system (as measured by party vote volatility) is even stronger. The results also suggest that economic policy has only indirect effects on election outcomes, the most direct being the destabilizing influence of tax increases on party structure. The data also are consistent with the use of policy for countercyclical stability (primarily through spending and deficits), fiscal response to voter turnout, the growth of both spending and deficits under larger governing majorities and compliant monetary response to fiscal deficits.