Economic shocks and the cost of ruling: evidence from Italy

Do voters punish governments more severely during international economic crises or do they discount exogenous shocks as they recognize the government's limited "room of manoeuvre"? The current literature provides conflicting answers to this question. This study argues that in such contexts citizens' economic perceptions are less likely to predict their sanctioning behavior but that, nonetheless, governments experience a higher cost of ruling. We show that in the paradigmatic case of Italy, government popularity during the Great Recession, while being hardly explained by economic evaluations, suffers a stronger decline as a function of time in office. We account for this increased cost of ruling by economic policy debates and other political events, such as cabinet crises and large-scale scandals.