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Reversal of Fortune for Political Incumbents after Oil Shocks

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  • Arezki,Rabah
  • Djankov,Simeon
  • Nguyen,Ha Minh
  • Yotzov,Ivan Victorov

Abstract

This paper explores the effect of oil shocks on electoral outcomes. Using a new polling and election data set for 207 elections across 50 democracies, the paper shows that oil price increases systematically lower the odds of reelection for incumbents. The analysis verifies that these shocks -- which reduce consumption growth -- are associated with worsening performance for incumbents in the runup to reelection and a reversal in the leaning of the political party in power post-election.

Suggested Citation

  • Arezki,Rabah & Djankov,Simeon & Nguyen,Ha Minh & Yotzov,Ivan Victorov, 2020. "Reversal of Fortune for Political Incumbents after Oil Shocks," Policy Research Working Paper Series 9287, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9287
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    More about this item

    Keywords

    International Trade and Trade Rules; Natural Disasters; Primary Metals; Employment and Unemployment; Inflation;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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