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Voters and Macroeconomics: Are They Forward Looking or Backward Looking?

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  • Smyth, David J
  • Dua, Pami
  • Taylor, Susan Washburn

Abstract

The political business cycle hypothesis has been criticized on the grounds that it is impossible for governments to generate a vote winning boom because voters judge political candidates by the performance they expect in the future. In this paper, the authors directly test the hypothesis that voters are forward rather than backward looking. They compare the conventional view that presidential popularity depends on recently observed inflation and unemployment to three alternative models that assume varying forms of forward looking behavior. Nonnested hypothesis tests reject the forward looking models in favor of the one with the recent actual variables. Copyright 1994 by Kluwer Academic Publishers

Suggested Citation

  • Smyth, David J & Dua, Pami & Taylor, Susan Washburn, 1994. "Voters and Macroeconomics: Are They Forward Looking or Backward Looking?," Public Choice, Springer, vol. 78(3-4), pages 283-293, March.
  • Handle: RePEc:kap:pubcho:v:78:y:1994:i:3-4:p:283-93
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    Citations

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    Cited by:

    1. D. J. Smyth & S. W. Taylor, 2003. "Presidential popularity: what matters most, macroeconomics or scandals?," Applied Economics Letters, Taylor & Francis Journals, vol. 10(9), pages 585-588.
    2. Philipp an de Meulen & Christian Bredemeier, 2012. "A Political Winner’s Curse: Why Preventive Policies Pass Parliament so Narrowly," Ruhr Economic Papers 0336, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    3. repec:zbw:rwirep:0336 is not listed on IDEAS
    4. Michael Berlemann & Sören Enkelmann & Torben Kuhlenkasper, 2015. "Unraveling the Relationship Between Presidential Approval and the Economy: A Multidimensional Semiparametric Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 30(3), pages 468-486, April.
    5. Berlemann, Michael & Enkelmann, Sören, 2014. "The economic determinants of U.S. presidential approval: A survey," European Journal of Political Economy, Elsevier, vol. 36(C), pages 41-54.
    6. an de Meulen, Philipp & Bredemeier, Christian, 2012. "A Political Winner's Curse: Why Preventive Policies Pass Parliament so Narrowly," Ruhr Economic Papers 336, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    7. Andrej Horvat, 2005. "Why does Nobody Care About the Absorption? Some Aspects Regarding Administrative Absorption Capacity for the EU Structural Funds in the Czech Republic, Estonia, Hungary, Slovakia and Slovenia before A," WIFO Working Papers 258, WIFO.
    8. David Mitchell & Keith Willett, 2006. "Local Economic Performance and Election Outcomes," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 34(2), pages 219-232, June.
    9. Gartner, Manfred, 1996. "Political business cycles when real activity is persistent," Journal of Macroeconomics, Elsevier, vol. 18(4), pages 679-692.

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