Words speak louder than actions: The impact of politics on economic performance

Osterloh, Steffen - Words speak louder than actions: The impact of politics on economic performance In this paper, a new approach to disclose the impact of politics on economic growth is presented: data derived from content analysis of party manifestos is used as measures of party preferences. In a panel of 23 OECD countries, a positive impact of party support for various market-liberal policies on economic performance can be detected. In particular, I show that parties which were more concerned with market interventions and - to a lesser extent welfare state policies impacted on growth negatively; those which proposed incentives for business as well as technology and infrastructure had a positive impact. Moreover, the robustness of the results is demonstrated in a model averaging framework. Journal of Comparative Economics 40 (3) (2012) 318-336. German Council of Economic Experts (Sach-verstandigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung). c/o Statistisches Bundesamt, 65180 Wiesbaden, Germany. (C) 2012 Association for Comparative Economic Studies Published by Elsevier Inc. All rights reserved.