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An empirical study of politico-economic interaction in the US

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  • Frey, Bruno S.
  • Schneider, Friedrich

Abstract

Popularity and reaction functions as the main relationships between the economic and political sectors are theoretically derived and empirically estimated with quarterly data for the U.S. One of the purposes is to endogenize government behavior in macro-econometric models. Unemploymentj inflation (negatively) and the growth of consumption (positively) influence presidential popularity. The presidents who fear not to be reelected use in turn their policy instruments (public expenditures and jobs) to increase their popularity. There is also some indication that the presidents pursue ideological goals when they are confident to win the upcoming election.

Suggested Citation

  • Frey, Bruno S. & Schneider, Friedrich, 1976. "An empirical study of politico-economic interaction in the US," Discussion Papers, Series I 76, University of Konstanz, Department of Economics.
    • Handle: RePEc:zbw:kondp1:76
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    References listed on IDEAS

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    1. Crotty, James R, 1973. "Specification Error in Macro-Econometric Models: The Influence of Policy Goals," American Economic Review, American Economic Association, vol. 63(5), pages 1025-1030, December.
    2. Wright, Gavin, 1974. "The Political Economy of New Deal Spending: An Econometric Analysis," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 30-38, February.
    3. Lawrence Lau & Bruno Frey, 1971. "Ideology, public approval, and government behavior," Public Choice, Springer, vol. 10(1), pages 21-40, March.
    4. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
    5. Ray C. Fair, 1975. "On Controlling the Economy to Win Elections," Cowles Foundation Discussion Papers 397, Cowles Foundation for Research in Economics, Yale University.
    6. Stephen M. Goldfeld & Alan S. Blinder, 1972. "Some Implications of Endogenous Stabilization Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 3(3), pages 585-644.
    7. Frey, Bruno S, 1974. "The Politico-Economic System: A Simulation Model," Kyklos, Wiley Blackwell, vol. 27(2), pages 227-254.
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    Cited by:

    1. Frey, Bruno S., 1976. "Theorie und Empirik politischer Konjunkturzyklen," Discussion Papers, Series I 75, University of Konstanz, Department of Economics.

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