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.