Presidential elections determine more than just the leadership of our nation. They have ripple effects on countless policies and government workings. However, they also have an effect on economic health, and it appears Democratic presidents usually have a better effect than Republicans on the economy. Alan Blinder and Mark Watson of the Woodrow Wilson School and Department of Economics at Princeton have released a new research paper on economic performance under the two parties.
“The U.S. economy performs much better when a Democrat is president than when a Republican is,” the paper reads. “The fact is not ‘stylized.’ The superiority of economic performance under Democrats rather than Republicans is nearly ubiquitous; it holds almost regardless of how you define success.” Just one such definition, the GDP growth, is shown to amount to 1.80 percentage points, which equals around 55 percent of the grand mean — a rather impressive gap.
The researchers do emphasize that a good 46 to 62 percent of the difference can be explained by “luck factors” such as better oil shocks for Democrats, greater consumer expectations, and happier luck when it comes to economic shocks. The remaining 48 to 64 percent of the difference is still a “mystery” says the study.
It does note however that while “Democrats would no doubt like to attribute the large D-R growth gap to macroeconomic policies,” it says “the data does not support such a claim. Fiscal policy reactions seem close to “even” across the two parties, and monetary policy is, if anything, more pro-growth when a Republican is president.”
The authors note that the difference in economic performance is seen most in the year directly following the election. They also examined whether this disparity in economic performance based on party was present in other countries. Canada showed a similar gap — however, the UK, France, and Germany did not show the same.
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