How Do Voters Evaluate the Economy? An Empirical Study of Government Change in the European Union

This study applies economic voting theory to data for 26 European Union countries from 2000 to 2023. The macroeconomic factors influencing government changes were investigated using the Common Correlated Effects Mean Group and Averaged Mean Group methods. The findings show that increasing inflation and unemployment strengthen the likelihood of a government change, while the effects of per capita income and income disparity are ineffective. Furthermore, this study contributes to the theory of economic voting by demonstrating that voter behaviour is influenced by the level of economic indicators, changes in these indicators, and people's views of these trends. The findings show that immediate signals influence voter behaviour and have practical implications for policymakers.