When the Money Stops: Fluctuations in Financial Remittances and Incumbent Approval in Central Eastern Europe, the Caucasus and Central Asia

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Abstract

Fluctuations in the volume and the value of financial remittances received from abroad affect the livelihood of households in developing economies across the world. Yet, political scientists have little to say about how changes in remittances, as opposed to the receipt of remittance payments alone, affect recipients’ political attitudes. Relying on a unique four-wave panel study of Kyrgyz citizens between 2010–2013 and a cross-sectional sample of 28 countries in Central Eastern Europe, the Caucasus and Central Asia, we show that when people experience a decrease (increase) in remittances, they become less (more) satisfied about their household economic situation and misattribute responsibility to the incumbent at home. Our findings advance the literature on the political consequences of remittance payments and suggest that far from exclusively being an international risk-sharing mechanism for developing countries, remittances can also drive fluctuations in incumbent approval and compromise rudimentary accountability mechanisms in the developing world.

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An Economic Theory of Political Action in a Democracy

Anthony Downs (1957)

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Short-Term Fluctuations in U.S. Voting Behavior, 1896–1964

Gerald Kramer (1971)

This paper develops several simple multivariate statistical models and applies them to explain fluctuations in the aggregate vote for the United States House of Representatives, over the period 1896-1964. The basic hypothesis underlying these models is that voters are rational in at least the limited sense that their decisions as to whether to vote for an incumbent administration depend on whether its performance has been “satisfactory” according to some simple standard. Because of data limitations, the analysis focuses on measures of economic performance, treating other aspects of an incumbent's performance, such as its handling of foreign affairs, as stochastic perturbations of the underlying relationship to be estimated. (Examination of residuals suggests this assumption is not unreasonable, at least during peacetime.) Possible effects of coattails from presidential races, of incumbency, and of secular trends in the underlying partisanship of the electorate are also taken into account. The models, estimated by maximum-likelihood methods, are found to be successful. Close to two-thirds of the variance in the vote series is accounted for, and the structural coefficients of the models are of the correct signs and of quite reasonable magnitudes. Economic growth, as measured by the changes in real per capita income, is the major economic variable; unemployment or inflation have little independent effect. Presidential coattails are also found to be of some importance.