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rate
of private
consumption rises.
[174]
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175
,ri (inflation),_+
7T2
+'7T3
7L
(unemployment)
(growth of consumption)
(popularitylevel of each
president)
'rD
(popularitydepreciation
for each president)
7TWAT
(Watergatevariable for
Nixon)
+t
(1)
'7T3>0,
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176
1.-THE
EFFECT OF
Economic
Inflation
(t-1)
Equation
(2)
s71
-
Two
ECONOMIC VARIABLES
ON PRESIDENTIAL
Variables
1953:II-1975:II
POPULARITY;
Personality
Factors
'T2
Growth
of Nominal
Consumption
'3
-4.00
(-5.40)
0.71
(2.63)
83.63
(20.16)
80.67
(17.69)
104.5
(18.97)
93.35
(18.88)
0.85
(2.20)
70.02
(11.74)
66.95
(15.75)
76.36
(19.36)
69.92
(17.38)
89.90
(20.33)
88.16
(18.11)
109.31
(19.94)
99.37
(20.76)
Unemployment
(3)
- 2.05
(-2.43)
(4)
- 1.58
(-2.44)
-4.30
(-5.56)
Popularity
Level
L
Eisenhower
first term
Eisenhower
term
second
Kennedy
Johnson
Note: The figures in parentheses are i-values. D.W. indicates the Durbin-Watson coefficient, p the coefficient of autoregression
obtained through the Cochrane-Orcuttiteration procedure,and d.f. the degrees of freedom. There is only one depreciationdummy for
Eisenhower,and for Kennedy and Johnson it is estimatedjointly in order to increase the numberof observationsand to save space.
ON PRESIDENTIAL
Economic Variables
POPULARITY;
1953:11-1975:Il
Personality Factors
Popularity Level
Equation
(5)
(6)
RPt- I
UR
ITI
7J2
-4.03
0.52
- 1.00
(-1.98)
(-5.23)
-0.97
(-1.22)
-4.20
(-5.44)
RCN
RCR
7T4
(1.69)
0.36
(1.67)
EI
EII
86.20
84.08
(17.91)
(15.72)
87.96
(19.08)
86.14
(16.97)
-T
K
105.6
J
95.04
(17.93)
(17.43)
107.2
(18.87)
96.87
(18.92)
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PopularityLevel
PersonalityFactors
PopularityDepreciation
ITL
177
l.-(continued)
Test Statistics
'TDTetSaiic
Watergate
Nixon
73.00
(18.40)
Ford
79.71
(13.69)
E
.11
(.55)
K/J
-2.14
(-12.07)
63.15
(11.57)
76.20
(7.67)
-.23
(- .69)
-1.27
(-4.77)
83.68
(18.24)
99.50
(10.41)
.11
(.52)
N
.10
(.35)
-.29
(-.79)
- 1.93
(-9.48)
.14
(.46)
k2
R
.90
D.W.
1.97
p
.22
d.f.
79
-4.70
(-3.71)
.90
1.99
.25
79
-4.87
(-5.32)
.90
2.00
.31
79
'WAT
-5.40
(-7.14)
TABLE 2.-(continued)
PopularityLevel
PersonalityFactors
PopularityDepreciation
Test Statistics
'TD
ITL
N
77.96
(13.77)
F
91.59
(8.75)
E
.08
(.37)
80.80
(15.98)
96.34
(9.84)
.09
(.41)
K/J
-2.00
(-10.02)
- 1.95
(-9.59)
N
.12
(.38)
.12
(.39)
'WAT
R2
-4.84
(-5.44)
-4.65
(-5.01)
.91
D.W.
1.98
p
.29
d.f.
78
.91
1.99
.31
78
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178
Lagged
Dependent
Variable
Po
0.64
(9.23)
FUNCTIONS;
(8)
Dependent
Variable
GX
(9)
TR
1.03
(11.71)
-2.21
(-3.25)
(10)
JOB
0.75
(8.97)
3701.4
(3.72)
Equation
Constant
-0.45
(-0.87)
1953:11-1975:II
Constraints
Squared
Popularity
Deficit
P2
Time
before
Elections
P3
0.002
(2.49)
0.37
(3.39)
0.11
(2.43)
0.002
(2.55)
0.03
(0.52)
10.95
(1.99)
0.02
(2.36)
5.96
(1.77)
Government
Receipts
Pi
0.08
(5.42)
Note: h indicates the test statistic against autocorrelation of the residuals with lagged dependent variables.
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179
'?American presidents almost invariably seek reelection. Even after they have served two terms they are
under strong pressure from their party (and especially
from their vice-presidents) to pursue policies as if they
were seeking another term. This is an attempt to ensure
that their successor will be a member of their own party.
"For example, Luce and Rogow (1956, p. 93) suggest
on the basis of a game theoretic analysis that it is optimal
to reach between 51% and 66% of the vote. Different
values of POP* in the neighborhood of 58% do not
significantlyaffect the result. See table 4.
TABLE 3.-(continued)
(Ideological) Goals
Eisenhower
.0003
(-.77)
-
.001
(.75)
-.05
(-.57)
Test Statistics
Kennedy
Johnson
Nixon
R2
d.f.
0.0001
(1.27)
- 0.0003
(-2.10)
- 0.0005
(-1.98)
.99
2.07
82
-0.002
(-0.58)
-0.0004
(-2.37)
.99
2.18
82
-0.42
(-0.63)
.99
2.09
82
-0.0007
(-0.53)
-0.04
(-0.51)
0.43
(2.27)
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180
cally expected. (For the period 1973:IV-1974:II react. The instruments(INSTR) considered are
when Nixon's popularitywas so extraordinarily
GX: nondefense exhaustive government exlow due to the Watergatescandal, it is assumed
penditures(current);
that the president was no longer able to affect
TR:
government transfersto private househis popularity significantly by economic acholds
(current);
tions.)
JOB: number of civilian governmentjobs.
As current popularity is an indicator of
future election outcome, government will u, is a random variable. The theoretically
certainly react much more strongly when a expected signs of all coefficients are positive.
popularity deficit appears shortly before an
Table 3 reports the OLS regression estimates
election date than when it appears a long time for the whole 22-year period. Due to the lagged
in advance. The amount of time before an endogenous variable INSTR(t -4) the t-values
election is reflected in a dummy variable, TBE, may be biased. Therefore, the h-test is also
which takes the values 1,2, 3,.. ., 8 starting with given.
the beginning of the second half of each
All coefficients relating to political factors
presidential term and ending one quarter have the theoretically expected positive sign.
before the election date. As the expansionary Government receipts seem to be statistically
measures are (ceteris paribus) assumed to be significant for both components of government
higher the closer the election (given POP expendituresas well as for employment. One of
<POP*), a positive coefficient is' expected. the most important determinants from the
(For POP > POP*, TBE= 0.)
point of view of a closed politico-economic
2. State of PopularitySurplus:When current model, the popularity deficit, is significant for
popularity is equal to or higher than is all three instrumentsconsidered.
necessary for re-election (POP > POP*), the
The regressionresults are quite insensitive to
president is able to put his ideological views different values of POP*. The estimates for
into practice. It may again be assumed that he exhaustive government expenditures GX are
will increasingly seize this opportunity as the shown as an example in table 4.
surplus becomes larger. The variable for each
These results indicate that for the period
president's "ideology" is equal to 1 and considered, there is empirical evidence for the
multiplied by the "room"available, formulated United States suggesting that economic condias (POP - PoP*)2. (For POP < POP*, this tions influence presidentialpopularity,and that
variable is zero.) There is a presumption that this in turn motivates the use of policy
for "ideological" reasons, conservative (Re- instruments-which then influence general
publican) presidents tend to restrict expendi- economic conditions. The positive sign of P2
tures, ceterisparibus.
indicates that administrations undertake an
It is now possible to state the regression expansionary policy-i.e., raise expendituresequation:
when they experience a popularity deficit and
are making an effort to raise their popularity
INSTR (t) = po INSTR (t -4) + constant
level.
+ p1 (governmentreceipts),_4
As the column referring to time before
elections
(p3) shows, presidents tend to signifi+ P2 (squared popularity
cantly increase exhaustive government expenditures before elections. It is somewhat
deficit), 1
surprising that the regression results do not
+ p3 (time before elections)
show similar behavior with respect to the other
+ p4 (eachpresident's
ideology) two policy instruments.
The coefficients relating to the ideological
+ ut.
(7)
goals variable are mostly negative but in quite
The variables all refer to the federal govern- a number of cases not statistically significant.
ment and are more fully explained in the They are significant in only a few cases, two of
appendix. The popularity deficit is lagged by which are for Johnson who, compared to other
one quarter, as the government needs time to presidents, seems to have restricted (ceteris
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181
SHARES(POP*),
TARGETPOPULARITY
FUNCTION(GX) WITHDIFFERENT
TABLE4.-GOVERNMENTEXPENDITURE
1953:11-1975:11
Constraints
POP*
Lagged
Dependent
Variable
Po
Time
before
Elections
Pi
Squared
Popularity
Deficit
P2
Government
Receipts
Constant
P3
(Ideological) Goals
Test Statistics
Statistic
T
p4
R2
h d.f.
0.63
(8.38)
-.35
(-.70)
0.10
(5.08)
0.0015
(2.08)
0.35
(3.08)
0.0002
(1.66)
-0.0004
(-2.24)
-0.0008
(-2.09)
.99 2.09 82
(-.84)
57%
0.66
(9.07)
-.37
(-.73)
0.10
(4.81)
0.002
(2.55)
0.36
(3.29)
-.0007
(-.82)
0.0002
(1.54)
-0.0003
(-2.10)
-0.0006
(- 1.99)
.99 2.10 82
58%
0.64
(9.23)
-.45
(-.87)
0.08
(5.42)
0.002
(2.49)
0.37
(3.39)
-.0003
(-.77)
0.0001
(1.27)
-0.0003
(-2.10)
-0.0005
(- 1.98)
.99 2.07 82
59%
0.64
(9.23)
-.41
(-.85)
0.11
(5.62)
0.0020
(3.46)
0.37
(3.50)
-.0004
(-.63)
0.0001
(1.15)
-0.0003
(-2.10)
-0.0005
(- 1.83)
60%
0.62
(8.50)
-.34
(-.63)
0.10
(5.13)
0.0023
(3.59)
0.38
(3.63)
-.0002
(-.36)
0.0001
(1.08)
-0.0002
1.74)
-0.0005
(- 1.89)
.99 2.05 82
(-
56%
-.0008
IV. ConcludingRemarks
The model of the interaction between the
economy and the polity (government) presented in this paper is extremely simple; it can
at best be considered a first step towards the
formulation of a realistic approach to politicoeconomic interdependence. Many important
aspects are obviously still missing, such as the
relationship between the government (president) and parliament (Congress), the central
bank (Federal Reserve System), economic and
other interest groups; a more explicit account
of governmentbureaucracyand its relationship
to particular sectors of the economy (e.g., the
Department of Agricultureto the farm sector);
and many others.
Taking account of the simplicity of the
model and its preliminary character, the
econometric estimates give quite reasonable
results. The popularity function is able to
explain a large share of the variance. It
indicates that unemployment,inflation, and the
growth of consumption have a significant
influence on presidentialpopularity.
There are many problems to be faced in
estimating government reaction functions. The
theoretical hypotheses advanced are, on the
whole, not refuted by empirical evidence; in
particular, governments take account of their
popularity when using economic policy instruments. When they are afraid of losing an
election, they make an effort to influence the
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183
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