"It is the economy, companheiro!": an empirical analysis of Lula's re-election based on municipal data

This paper discusses the reasons that led to the Lula's 2006 re-election. Spatial analysis methods revealed that, contrary to 2002, the President had more votes in less developed municipalities of Brazil. The econometric results cast doubt on the analyses that attribute to Bolsa Família Programme total responsibility for the re-election. Lula''s electoral success results from changes in the labor market, low inflation and an export boom that have reduced inequality and improved the real wages of the Brazilian poor.