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Partisan Cycles in Congressional Elections and the Macroeconomy

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  • Alberto Alesina
  • Howard Rosenthal

Abstract

The post-war United States exhibits two rather strong politico-economic regularities. The political regularity is that the party of the President has always lost votes in aid-term Congressional elections, relative to its Congressional vote in the previous elections; the economic regularity is that Republican administrations exhibit below average economic growth in the first half of each term and Democratic administrations are associated with above average growth in their first half. In the second halves economic growth is similar under the two administrations. We provide a rational expectations model which can explain these two regularities. In Presidential elections voters have to choose between two polarized candidates; mid-term elections are used to counterbalance the President's policies by strengthening the opposition in Congress. Since presidents of different parties are associated with different economic policies, our model predicts a (spurious) correlation between the state of the economy and elections. The predictions of our model are in sharp contrast with those of traditional retrospective voting models in which voters simply reward the incumbent if the economy is doing well immediately before the election. Our empirical results suggest that our model performs at least as well and often better than alternative models. In addition, we question previous claias that voters are short sighted and naively backward looking.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2706.

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Date of creation: Sep 1988
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Publication status: published as American Political Science Review, vol. 83, no. 2, pp373-398, June 1989
Handle: RePEc:nbr:nberwo:2706

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Cited by:
  1. Steven D. Levitt & James M. Snyder, Jr., 1995. "The Impact of Federal Spending on House Election Outcomes," NBER Working Papers 5002, National Bureau of Economic Research, Inc.
  2. 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.
  3. David S. Lee, 2001. "The Electoral Advantage to Incumbency and Voters' Valuation of Politicians' Experience: A Regression Discontinuity Analysis of Elections to the U.S..," NBER Working Papers 8441, National Bureau of Economic Research, Inc.
  4. Belke, Ansgar & Herz, Bernhard & Vogel, Lukas, 2005. "Structural Reforms and the Exchange Rate Regime: A Panel Analysis for the World versus OECD Countries," IZA Discussion Papers 1798, Institute for the Study of Labor (IZA).
  5. William D. Nordhaus, 1989. "Alternative Approaches to the Political Business Cycle," Cowles Foundation Discussion Papers 927, Cowles Foundation for Research in Economics, Yale University.
  6. Alesina, A. & Rosenthal, H., 1989. "Moderating Elections," Working papers 537, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Ray C. Fair, 2007. "Presidential and Congressional Vote-share Equations," Cowles Foundation Discussion Papers 1602, Cowles Foundation for Research in Economics, Yale University.
  8. Ansgar Belke & Bernhard Herz & Lukas Vogel, 2006. "Are Monetary Rules and Reforms Complements or Substitutes? A Panel Analysis for the World versus OECD Countries," Working Papers 129, Oesterreichische Nationalbank (Austrian Central Bank).
  9. John W. Patty, 2005. "Loss Aversion, Presidential Responsibility, and Midterm Congressional Elections," Public Economics 0502007, EconWPA.
  10. Mauricio Bugarin, 1998. "Vote Splitting as Insurance Against Uncertainty," Game Theory and Information 9811001, EconWPA.

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