| Abstract: | Following the mainstream modelling of ‘politico-economic interaction’, the author reviews the major analyses of the Scandinavian countries. Noting that empirical findings diverge, both for the reaction function and the popularity function, the article estimates these relations on Norwegian data. For the popularity function, the analysis suggests that rates of inflation have a weak, but statistically significant impact on the popularity of governments. For the recent non-socialist governments, the analysis suggests greater impact of unemployment and real wage growth as well. The results for the reaction function support the mainstream notion that declining rates of inflation and increasing unemployment tend to cause more expansionary government policies. The estimated equations do not support the proposition that the election cycle or governments position on the opinion polls influences economic decision-making. Finally, the findings are discussed in the light of traditional normative positions |
