Political approval ratings and economic performance: evidence from Latin America
Using a panel of 18 Latin American countries for the period 2002-2015, we study the impact of economic variables on government approval. Our empirical analysis shows that the composition of government spending, growth and inflation are related to government's approval ratings in Latin America. More specifically, we show that for each point of additional growth the approval rating can increase as much as 4.2 percentage points; and that an increase in the share of social spending in total government spending is associated with 2.5 percentage points of increase in government approval. Inflation also affects negatively government's approval. This tells us that a program focused on social spending, growth and macroeconomic stability have a positive influence in the popularity of the government.