ABSTRACT
Many academic studies have examined the macroeconomic implications of partisan politics. They have explored the implications of partisan policymakers pursuing primarily ideological goals and have confirmed that different parties have different preferences about inflation, growth, and unemployment. Leftist parties tend to be relatively more concerned about unemployment than about inflation, while right-wing parties have the opposite concerns. Some scholars have argued, that partisanship is not a useful proxy for a government's economic orientation. The recent financial upheaval in Europe has demonstrated the impact of partisan politics on financial market sentiments, as in the case of the Syriza government in Greece. The left-wing governments seem to be at a disadvantage in attracting foreign capital, because there is no clear guarantee that these governments will not act opportunistically later. Markets consider government partisanship an important determinant of sovereign credibility in developing countries, even when other important economic performances are taken into consideration.
