Political macroeconomy refers to the interconnection between macroeconomic politics and macroeconomic performance. The expectational Phillips curve may be used to examine the economic aspects of this interrelation. Macroeconomic politics relates to voter behavior, presidential reelection ambition, partisan economic priorities, and special interests. These factors impact the fiscal and monetary policy actions of the president, Congress, and central bank. According to the electoral effect, presidents attempt to boost the economy before an election to increase reelection votes.
According to the partisan effect, conservative presidencies are relatively inflation averse, while liberal administrations are relatively unemployment averse. The evidence, however, suggests that the electoral and partisan effects occurred idiosyncratically in the U.S. economy during 1961-2016. The economy also affects presidential approval, Congressional elections, consumer sentiment, voter participation, and macropartisanship. An international dimension of the political macroeconomy is the issue of free trade versus protectionism and the perspectives of economic liberalism, neomercantilism, and structuralism.
Author(s): Gerald T. Fox
Edition: 2
Publisher: Business Expert Press
Year: 2019
Language: English
Pages: 207
City: New York
Cover
Political Dimensions of the American Macroeconomy
Contents
Acknowledgments
Chapter 1: The Political Macroeconomy
Macroeconomics and National Politics
Intersection between Macroeconomic Performance and Macroeconomic Politics
Political Macroeconomy of Peace and Prosperity versus Conflict and Poverty
The Classical View versus Keynesianism
Median Voter Model and Political Business Cycle Effects
Chapter 2: Refresher on Macroeconomic Measurements and the Business Cycle
Introduction
Inflation
Nominal GDP versus Real GDP
Components of GDP
Unemployment
Business Cycle
Okun’s Law
Chapter 3: Mainstream Macroeconomic Theory and the Expectational Phillips Curve
Introduction
Macroeconomic Efficiency versus Inefficiency
Macroeconomic Supply and Demand
Expectational Phillips Curve
Resolving a Recession: The Classical View versus the Keynesian View
Impact of Energy Prices on the Macroeconomy
Chapter 4: Fiscal and Monetary Policies
Introduction: Expansionary and Contractionary Policies
Fiscal Policy: Government Spending and Taxes
Monetary Policy: Money Supply and Interest Rates
Fiscal and Monetary Policy Coordination and Time Lags
Chapter 5: Voter Rationality and Macroeconomic Preferences
Introduction: Rational Voting, Rational Ignorance, and Political Parties
Normal Distribution of Voter Preferences: The Partisan Model and the Median Voter Model
Bimodal Distribution of Preferences, Protest Vote Abstention, and the Partisan Influence Model
Conclusion
Chapter 6: Electoral Political Business Cycle
Introduction: Political Business Cycle Effects
Macroeconomic Time Inconsistency and the Electoral Cycle
Electoral Cycle: Asymmetric Information and the Principal–Agent Problem
Short-Run and Long-Run Effects in Preelection Phase
Short-Run and Long-Run Effects in the Second Phase
Summary of the Electoral Cycle
Electoral Cycle Implications
Chapter 7: Partisan Political Business Cycle
Introduction
Liberal Partisan Cycle
Conservative Partisan Cycle
Chapter 8: Evidence of Electoral and Partisan Cycles
Introduction
Primary and Secondary Electoral and Partisan Effects
Evidence of PBC Effects during Democratic Presidencies
Evidence of PBC Effects during Republican Presidencies
Summary of PBC Effects across Political Parties and Presidencies
Synthesis of PBC Effects
Chapter 9: Other Political Business Cycle Considerations
Main Assumptions of the Electoral and Partisan Effects
Macroeconomic Uncertainty and Presidential Reelection Vulnerability
Central Bank Independence?
Chapter 10: Economic Influence on Public Sentiment and Voter Behavior
Introduction
Macroeconomic Accountability and Electoral Efficiency
Economic and Noneconomic Effects on Presidential Elections and Presidential Approval
Economic Influence on Congressional Elections
Other Measures of Public Sentiment Relating to the Economy
Chapter 11: Trade Policies and International Political Perspectives
Introduction
Relation between Net Exports, GDP, Unemployment, and the Exchange Rate
Comparative Advantage, Free Trade, and Economic Liberalism
Trade Protectionism and Neomercantilism
Political Pressures on Trade Policy
Mercantilism and Neomercantilism
Economic Structuralism
Modern World Systems View and Dependency Theory
Summary
Chapter 12: Conclusion
References
About the Author
Index
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