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A Model Of The Political Economy Of The United States

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Author Info

  • ALESINA, A.
  • LONDREGAN, J.A.
  • ROSENTHAL, H.

Abstract

We develop and test a model of joint determination of the rate of economic growth and the results of presidential and Congressional elections in the United States. In our model, economic agents and voters have rational expectations. Economic policy varies as a function of control of the White House and the two-party shares in Congress. Politics affects growth through unanticipated policy shifts following the outcome of presidential elections. The economy influences elections as voters use past realizations of growth to make rational inferences about the "competency" level of the incumbent administration. Elections are also influenced by voters using their midterm Congressional votes to moderate the policies of the incumbent administration. The theoretical model is used to generate a recursive system of equations in which the dependent variables are the growth rate and the vote shares in presidential and Congressional elections. The theory implies several restrictions on the equations. Tests of the restrictions generally support the model; however, the results support the traditional view of naive retrospective voting as well as the "rational" retrospective voting posited in the model.

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Bibliographic Info

Paper provided by Carnegie Mellon University, Tepper School of Business in its series GSIA Working Papers with number 1990-27.

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Length: 46 pages
Date of creation: 1990
Date of revision:
Handle: RePEc:cmu:gsiawp:1990-27

Contact details of provider:
Postal: Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
Web page: http://www.tepper.cmu.edu/

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Web: http://student-3k.tepper.cmu.edu/gsiadoc/GSIA_WP.asp

Related research

Keywords: economic models ; economic growth ; elections;

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Cited by:
  1. S. Brock Blomberg & Gregory D. Hess, 2000. "Is the political business cycle for real?," Working Paper 0016, Federal Reserve Bank of Cleveland.
  2. Hibbs Jr., Douglas A., 2004. "Voting and the Macroeconomy," Working Papers in Economics 144, University of Gothenburg, Department of Economics, revised 05 Oct 2004.
  3. Ali T. Akarca & Aysit Tansel, 2004. "Economic Performance and Political Outcomes: An Analysis of the 1995 Turkish Parliamentary Election Results," ERC Working Papers 0401, ERC - Economic Research Center, Middle East Technical University, revised Jan 2004.
  4. Cohen, Gerald & Alesina, Alberto & Roubini, Nouriel, 1992. "Macroeconomic Policy and Elections in OECD Democracies," Scholarly Articles 4553023, Harvard University Department of Economics.
  5. Alesina, Alberto, et al, 1996. " Political Instability and Economic Growth," Journal of Economic Growth, Springer, vol. 1(2), pages 189-211, June.
  6. Persson, T., 1992. "Politics and Economic Policy," Papers 518, Stockholm - International Economic Studies.
  7. Luisa Lambertini, 2003. "Are Budget Deficits Used Strategically?," Boston College Working Papers in Economics 578, Boston College Department of Economics.
  8. Berlemann, Michael & Markwardt, Gunther, 2003. "Partisan cycles and pre-electoral uncertainty," Dresden Discussion Paper Series in Economics 01/03, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  9. Roubini, Nouriel & Swagel, Phillip & Ozler, Sule & Alesina, Alberto, 1996. "Political Instability and Economic Growth," Scholarly Articles 4553024, Harvard University Department of Economics.

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