Presidential approval and macroeconomic conditions: evidence from a nonlinear model

Seung-Whan Choi, Patrick James, Yitan Li and Eric Olson ()

Applied Economics, 2016, vol. 48, issue 47, 4558-4572

Abstract: Contrary to previous empirical studies that find a linear link between economic conditions and presidential approval, this study argues for and finds a nonlinear relationship. A threshold regression is used to assess potential nonlinear relationships between macroeconomic variables and presidential popularity. A quarterly data analysis for the 1960Q1–2012Q2 time period reveals that domestic factors prevail in shaping presidential approval. Most compelling is evidence of a threshold relationship involving economic conditions: When unemployment is slightly over 7%, its decline impacts significantly and favourably on presidential approval, an effect that virtually disappears below the threshold value. Change in consumer sentiment affects presidential approval in a limited way, while inflation shows no association at all. These results combine to encourage further investigation of nonlinear processes in the nexus of economics and politics.

Date: 2016
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DOI: 10.1080/00036846.2016.1161718

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