Commodity Shocks, Misattribution, and Incumbency Effects: Evidence from Brazil

• In Event: Responsiveness and Accountability in Latin America

Abstract

Do external shocks to the economy affect the electoral returns to office? Coupling a measure of exogenous municipal commodity shocks with a “close election” regression discontinuity design, this paper shows that while increases in the price of agricultural commodities greatly enhance the incumbency advantage of Brazilian mayors, negative shocks can similarly reduce their probability of reelection vis-à-vis challengers. The electoral effect of commodity price volatility is particularly pronounced in rural municipalities, where it can produce a net incumbency disadvantage. We also show evidence that commodity inflation likely influences elections via municipal GDP, particularly in rural settings. By showing that voters cannot adequately distinguish exogenous factors from incumbents’ actions, we contribute to the growing evidence on the limitations of retrospective voting. We also underscore that exposure to adverse economic shocks, which afflicts many developing economies, may represent a heretofore unrecognized source of incumbency effects.

Author

• Luis E Schiumerini, University of Oxford