Democratic
presidents tend to preside over better economies than Republican ones, but that
may be down to pure luck, according to a recent paper from Alan Blinder and
Mark Watson at Princeton.
Since
the end of World War II, the U.S. economy
has grown at an average real rate of 4.35% under Democratic presidents and only
2.54% under Republicans. So what gives?
"Democrats
would no doubt like to attribute the large D-R growth gap to better
macroeconomic policies, but the data do not support such a claim," they
write. "It seems we must look instead to several variables that are mostly
'good luck.'"
Three
factors can explain 46-62% of the growth gap, according to the paper. Here are
the reasons (via James Hamilton):
Oil shocks. With the exception of
Jimmy Carter, oil price shocks tend to dog Republican administrations more. The
1956-57 Suez Crisis, early-70s OPEC embargo, 1980 Iran-Iraq War, and the Iraqi
invasion of Kuwait in 1990 all happened during Republican administrations.
Productivity. It's hard to say that a
U.S. president is responsible here, but Democrats
tend to see bigger gains in productivity. Bill Clinton, for example, enjoyed a
big boost in U.S. productivity during the 1990s.
Consumer confidence. Consumers tend to have a
rosier outlook on the U.S. economy in the first year a Democrat is in the White
House. "Yet the superior growth record under Democrats is not forecastable
by standard techniques, which means it cannot be attributed to superior initial
conditions," they write. Chalk this one up to luck again, but it does come
"tantalizingly close to a self-fulfilling prophecy in which consumers
correctly expect the economy to do better under Democrats, then make that
happen by purchasing more consumer durables."
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