Partisanship and Electoral Incentives

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Tufte (1978) and Hibbs (1987) both argue that there are two principle political influences on macroeconomic policy: partisanship and electoral incentives. However, they differ with regard to the emphasis they place on each influence. While Tufte emphasizes the influence of electoral incentives, Hibbs argues in favor of the influence of partisanship. Franzese’s (2002) review of electoral and partisan influences on macroeconomic outcomes suggests that there is more empirical evidence supporting Hibbs’ assertion. However, he also suggests that there is considerable room for an analysis of “context-conditional electoral and partisan cycles” (Franzese, 2002, p. 369). Bearing this in mind, I argue that incumbent politicians can switch between…show more content…
He finds that in general, Democrats seek a lower unemployment rate as well as higher output and are willing to absorb higher inflation in order to achieve this ideological goal. In contrast, Republicans are more concerned with the level of inflation and are willing to trade higher unemployment and lower output in order to accomplish this (Hibbs 1987). Opportunity. Similarly to Tufte’s explanation, by virtue of their position as policymakers, incumbents have the ability to create and influence macroeconomic policy. With respect to Hibbs’ partisan explanation, policymakers are able to secure the support of their party and fulfill ideological mandates through the manipulation of macroeconomic policy (Hibbs 1987). Policy Instruments. Policymakers under Hibbs’ partisan explanation are willing to use both fiscal and monetary policy instruments in order to achieve their goals. While electorally-oriented policymakers emphasize fast-acting policy instruments in order to localize the effect on the economy around the election, policymakers pursuing a partisan approach could make use of additional fiscal policy instruments. For example, in order to reduce inflation, an economic contraction could be created through a combination of an increase in the interest rate by the Federal Reserve (fiscal policy) and a
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