Is One Political Party Better Than the Other for the Economy?
Basically no, notwithstanding Paul Krugman’s frequent assertions to the contrary. This comes from Jim Campbell via Tyler Cowen:
Previous estimates did not properly take into account the lagged effects of the economy. Once lagged economic effects are taken into account, party differences in economic performance are shown to be the effects of economic conditions inherited from the previous president and not the consequence of real policy differences….. When economic conditions leading into a year are taken into account, there are no presidential party differences with respect to growth, unemployment, or income inequality.
Interesting. You often hear that Democratic presidents are better for the economy. Glad to see that idea refuted.
Good post.
Merely looking at the economic conditions during the period while each party was in power doesn’t take into account political conditions and a party’s degree of control.
For instance, President Clinton is often credited with strong economic performance. Yet members of his own party disagreed with his (moderate) policies; while pundits accused him of stealing ideas from the Republicans. Clinton’s policies probably had more to do with his politics than his party.
Regardless of the party in power, policies often have more to do with gaining votes than doing what’s best for the economy.
Interesting post.
Good post. This is good to know.
People don’t get to vote on economic policy directly, so they can punish/reward the dominant incumbent party if dissatisfied/satisfied with the economy — regardless of responsibility for current conditions.
So, if the “lag” effect is valid, that means any economic gains during W’s administration were all the result of Clinton and the totality of our current problems are the result of W!
artk,
You took the words right out of my mouth. This equally indicates that tax breaks for corporations or the rich do not create jobs.