The decoupling of government sentiment and the macroeconomy in a highly polarised political setting

Abstract

ABSTRACT This article argues that causality between economic conditions and political sentiment can be moderated by the presence of strong political polarisation based on sociocultural issues. We look at the interdependencies between economic and political sentiment in Croatia, a country characterised by strong political divisions over interpretations of history, the role of religion in society, and conflicts of traditional vs. modernist values. Our results reveal that economic variables and government support move more or less independently. Thus, we conclude that performance evaluation in general, and economic voting in particular, play a very small role in Croatian politics.