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Presidential party affiliation and electoral cycles in the U.S. economy: Evidence from party changes in adjacent terms

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  • Stone, Joe A.
  • Jacobs, David

Abstract

Unique evidence presented in this study challenges previous findings about presidential politics and business cycles. Prior studies find strong evidence for a Democratic economic growth advantage of about 1.8% per year over the course of a term but only weak evidence for a pre- election surge in growth for incumbent Presidents of either party. This study finds a much smaller Democratic advantage and strong evidence for a pre-election growth surge for Republican Presidents relative to Democratic Presidents. The novelty of these results is attributable to the use of repeated party-change reversals in adjacent terms for identification in place of binary changes in isolated terms separated by as much as a half-century in prior studies. We find a strongly partisan Federal Reserve effect on growth as well. Results are insensitive to an extensive battery of robustness checks.

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  • Stone, Joe A. & Jacobs, David, 2020. "Presidential party affiliation and electoral cycles in the U.S. economy: Evidence from party changes in adjacent terms," Journal of Macroeconomics, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:jmacro:v:64:y:2020:i:c:s016407041930504x
    DOI: 10.1016/j.jmacro.2020.103200
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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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