Presidential party affiliation and electoral cycles in the U.S.economy: evidence from party changes in adjacent terms

Joe Stone and David Jacobs

MPRA Paper from University Library of Munich, Germany

Abstract: Unique evidence presented in this study challenges previous findings about presidential politics and business cycles. Prior studies find strong evidence for a Democratic economic growth advantage of about 1.8 percent per year over the course of a term but only weak evidence for a pre- election surge in growth for incumbent Presidents of either party. This study finds a much smaller Democratic advantage and strong evidence for a pre-election growth surge for Republican Presidents relative to Democratic Presidents. The novelty of these results is attributable to the use of repeated party-change reversals in adjacent terms for identification in place of binary changes in isolated terms separated by as much as a half-century in prior studies. We find a strongly partisan Federal Reserve effect on growth as well. Results are insensitive to an extensive battery of robustness checks including a placebo test.

Keywords: political business cycles; Presidents; Economic Growth (search for similar items in EconPapers)
JEL-codes: E6 E60 H5 (search for similar items in EconPapers)
Date: 2019-09-07
New Economics Papers: this item is included in nep-mac and nep-pol
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Related works:
Journal Article: Presidential party affiliation and electoral cycles in the U.S. economy: Evidence from party changes in adjacent terms (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:96064

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