Tipping Points in the Croatian Political Sentiment: When, Why, and Does the Economy Have Anything to Do with It?

Abstract

Building upon two political opinion polls, we formally test for structural breaks in the approval rates of major Croatian political parties, the Government, and the general societal direction. Departing from the mainstream studies of political sentiment, we find asymmetries between the macroeconomy and incumbent's approval rates. Namely, only major economic turmoil can alter the way citizens evaluate political parties. The found structural breaks are driven by corruption scandals involving high party officials, and by major negative economic shocks, confirming the loss aversion concept. During economic booms, political sentiment exhibits a separate trajectory, independent of the macroeconomy. We also test for threshold effects in the generating process of political sentiment, finding that it reacts significantly only to large unemployment levels. The stated conclusions are in line with the prevailing narrative that the Croatian political landscape is highly polarised, divided over ideological issues and socio-cultural norms, so voters in typical economic circumstances do not evaluate incumbents based on their economic performance, but on their successfulness in representing ideological positions.