Title

Presidents and the U.S. Economy: An Econometric Exploration

Author(s)

Alan S. Blinder Alan Blinder (Princeton University)

Mark W. Watson Mark Watson (Princeton University)

Abstract

The U.S. economy has grown faster—and scored higher on many other macroeconomic metrics-- hen the President of the United States is a Democrat rather than a Republican. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 complete presidential terms. This paper asks why. The answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. Many other potential explanations are examined but fail to explain the partisan growth gap.

Creation Date

2014-07

Section URL ID

Paper Number

241

URL

https://gceps.princeton.edu/wp-content/uploads/2017/01/241blinderwatson.pdf

File Function

Jel

E30, E60

Keyword(s)

United States

Suppress

false

Series

3