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The Democratic-Republican Presidential Growth Gap and the Partisan Balance of the State Governments

Dodge Cahan and Niklas Potrafke ()

No 6517, CESifo Working Paper Series from CESifo Group Munich

Abstract: Higher economic growth was generated during Democratic presidencies compared to Republican presidencies in the United States. The question is why. Blinder and Watson (2016) explain that the Democratic-Republican presidential growth gap (D-R growth gap) can hardly be attributed to the policies under Democratic presidents, but Democratic presidents – at least partly – just had good luck, although a substantial gap remains unexplained. A natural place to look for an explanation is the partisan balance at the state level. We show that pronounced national GDP growth was generated when a larger share of US states had Democratic governors and unified Democratic state governments. However, this fact does not explain the D-R growth gap. To the contrary, given the tendency of electoral support at the state level to swing away from the party of the incumbent president, this works against the D-R growth gap. In fact, the D-R presidential growth gap at the national level might have been even larger were it not for the mitigating dynamics of state politics (by about 0.3-0.6 percentage points). These results suggest that the D-R growth gap is an even bigger puzzle than Blinder and Watson’s findings would suggest.

Keywords: Democratic-Republican GDP growth gap; federalism; partisan politics; government ideology; United States; Democrats; Republicans (search for similar items in EconPapers)
JEL-codes: D72 E60 H00 N12 N42 P16 (search for similar items in EconPapers)
Date: 2017
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