Presidents and the U.S. economy

By Paul Walker 06/08/2014

There is a new NBER working paper out on Presidents and the U.S. Economy: An Econometric Exploration by Alan S. Blinder and Mark W. Watson. The abstract reds:

The U.S. economy has grown faster—and scored higher on many other macroeconomic metrics—when the President of the United States is a Democrat rather than a Republican. For many measures, including real GDP growth (on which we concentrate), the performance gap is both large and statistically significant, despite the fact that postwar history includes only 16 complete presidential terms. This paper asks why. The answer is not found in technical time series matters (such as differential trends or mean reversion), nor in systematically more expansionary monetary or fiscal policy under Democrats. Rather, it appears that the Democratic edge stems mainly from more benign oil shocks, superior TFP performance, a more favorable international environment, and perhaps more optimistic consumer expectations about the near-term future. Many other potential explanations are examined but fail to explain the partisan growth gap.

So Democrats got lucky.

0 Responses to “Presidents and the U.S. economy”

  • If the current Democrat government is lucky due to external factors it has no influence over, does this also apply to the current government in NZ?

  • So, Democrats got lucky a statistically significant number of times.

    What is it the self-made like to say about luck? Ah yes, the harder I work, the luckier I get.

    Also, if a result is both large AND statistically significant, luck? Really?

    Boy, I hope those last three words of yours are intended as irony Paul.

  • Dan To a large degree yes.

    Ashton Note that their success is down to benign oil shocks, are you saying that any US President can affect oil stocks? superior TFP performance, again mostly outside the control of any US President.- the 1990s productivity jump,for example, was due to past investment in technology, a more favorable international environment, agains its not obvious how any President could cause this, and perhaps more optimistic consumer expectations , may be this one could in part be due to the President but to explain the result the effect would have to be huge.

    So yes I really am saying they got lucky.

  • statistically significant luck. Kinda oxymoronic.

    In fact, drop the slang modifier in my second sentence.

    Now, if you had used the term “timing” I could possibly agree.

    As to the favorable international environment – lets look at two recent examples. Clinton used a diplomacy that assisted align US interests with previously anti-US states – China springs readily to mind. Dubbya allegedly couldn’t find China on a map.

    There is a double implication in the premise that it was all about “luck”. The flip side is that Republicans were “unlucky”. Repeatedly.

    I guess that, on the evidence, the US population should vote Democrat and then head to Vegas on the assumption that luck will continue to run with them.

  • Interesting. As a student, I did lawns/gardens/property maintenance for a ex economics lecturer from Massey who always insisted that governments in NZ had little control over the performance of the economy, no matter what the did, but politicians were always keen to either take credit or place blame.

    • I agree with your ex-lecturer, but with a couple caveats. At least here in NZ, it’s relatively easy to know where to place the blame for most outcomes. Central government controls most things. If you know which Party the PM belongs to, you can punish him or her at the ballot box. There will be plenty of over-blaming for bad outcomes and over-crediting for good outcomes, but at least the right agent will be getting the credit. In the States, you have to work out which level of government’s to blame, and which branch. Voters really don’t handle that kind of problem very well: they diffuse responsibility across all possible agents, so all agents’ incentives to avoid bad outcomes are unduly attenuated.

  • Dan. I would generally agree. Most economies are subject to forces outside teh control of any government. Just look, for example, at the recent fall in the price of milk. Little the government can do about that.

    Ashton. How could any president control the oil stocks? How could any president cause a jump in productivity? Improving relations with China goes back to Nixon. And even if you accept the notion that Clinton did improve the “international environment” given the time frames involved the benefits of such polices would not have shown up within Clinton’s time in office and thus can’t explain why his term looked good economically. More likely his terms looked successful because the US had a jump in productivity in the 90s, which had nothing to do with him.

  • Not being particularly familiar with US history or who was in government when, I do have to ask whether the economic outcomes of, say, the oil shocks, were influenced by government responses.

    For instance, a quick check tells me that Nixon’s response to the 1973 oil crisis was to implement price controls, which are generally considered to have made things worse.

    Of course, that one example doesn’t mean there’s anything systemic at work, but it might nevertheless be interesting to look into policy responses to crises. Pity the full paper’s not freely available. I’d be interested in seeing more detail of what they did or didn’t look at.

    • Oh, agree. Nixon’s price controls were terrible, and Jimmy Carter is undercredited for having started the reforms built on by Reagan. It’s awful hard putting too many control variables into these President-effects regressions; not all that many data points.

  • “At least here in NZ, it’s relatively easy to know where to place the blame for most outcomes. Central government controls most things”

    Two issues here. First, given the lags between policy implementation and outcomes, what is happening today is most likely the result of policies from one or two governments back which may have nothing to do with the current government. Second. Many of the things that affect NZ, be they good or bad, clearly have nothing to do with NZ governments, eg. Korean War, oil price stocks, milk prices etc.

    • Of course. All of that is the same across different countries though. I was only talking about differences in government structure: Parliamentary vs Presidential, Unicameral vs Bicameral, Federal vs Unitary.

  • Oil and wars are great business, especially when it seems that our reliance on fossil fuels for the economic benefits seems to be above any other president on earth. Even going so far is to effect scientific dogma of last century and even this century. As we see Tesla’s contribution to physics is limited in the mainstream education system, but our reliance on his products and patents which have evolved in today’s world is almost unparalleled.
    Even today we see Cold Fusion as having a paradigm shift in the way we think of physics (this subject still has not been covered yet, but by connecting the dots intelligent people can surmise that physics is going to change) as the dogma of last century’s accountants physics has still to be unravelled and replaced with theories that can explain where this abundance of energy comes from.
    But if you don’t believe me about this from Cornell University physics department “Even by the most conservative assumptions as to the errors in the measurements, the result is still one order of magnitude greater than conventional energy sources.”
    So we have all this energy that is available to replace the corruption of the fossil fuel industry. But you aren’t being told about it and the dogma of last century physics says it is not possible, but in reality we see it is real, peer reviewed and being hastened into production.
    So be ready for a paradigm shift away from theories which only hold back this new technology.

  • Keeping cold fusion in your face as the media wont cover this and this is science at its peak,solving the energy crisis. What do we do when the oil runs out ? This has already been sorted LENR$ allows water to be used as a fuel.
    Forbes $$
    The economists hate this technology and this is seen by the non coverage in the media.
    Just goes to show how easily people are manipulated and how stupid and corrupt the system is. Go to your television and get brain washed.
    COLD FUSION is real and will solve our energy crisis, its non polluting and will only help us clean up this mess from oil.
    COld fusion is the best thing that could happen to our species and you aren’t being told about it on purpose.
    A real life conspiracy.
    Scientific verification of Rossis E cat, a device which turns Einstein on his head. You can believe out dated theories or look instead at new realities .
    COLD FUSION the answer we have been looking for.

    • I’m pretty sure there’s no conspiracy of economists and the media to keep cold fusion from the public, Derek. Or at least if it is, I’ve not been given the secret handshake yet.

      The REAL conspirators here are likely the Stonecutters, possibly in conjunction with the reverse vampyres and the RAND Corporation.

  • Ok Eric well before we talk about no conspiracy lets talk about things that should make news. A new fuel source which is what cold fusion is. The E cat should have made world headlines with its clean, green, sustainable energy out put. “Even by the most conservative assumptions as to the errors in the measurements, the result is still one order of magnitude greater than conventional energy sources”. But no there are still people who think that oil is where it is at.This alone is news I want to hear, I think, but strangely not even a splash in the pond, it is only through the freedom of the internet that I can find out about this. First qualification for a conspiracy media blacklisting.
    People on this site were bragging how cold fusion was pseudo-science and energy from water was not possible, cold fusion disproves both of these statements, the blatant spreading of mis truths is a conspiracy.
    Third when cold fusion first came out the Hot fusion scientists did every thing they could to discredit Pons and Fliechsman and it worked in the press anyway, with the “Times” magazine coming out saying Cold Fusion is dead.
    MIT had a Wake for cold fusion as they considered it dead and buried ,.
    DR. EUGENE MALLOVE an outspoken advocate for cold fusion and editor of Infinite energy, was murdered. Another qualification for a conspiracy MURDER.
    Under the definition of conspiracy you will find this qualifies no vampires needed.
    Anyone who wants to delve deeper into this should refer to the history of last century and the establishment of the industrial era , with the major players involved. You only have to look at what happened to the greatest scientist of last century (if you think this was Einstein you need your head read, go back to your TV). Yes the great inventor responsible for the 20th century and subsequently banished to obscurity.
    They have names for people who believe everything in mainstream media and who fail to question the discrepancies. Next you will be telling me that Israel has the right to kill innocent civilians, just like they do on the news.

  • Not in the spirit of this site or blog, but Derek…


    Pons et al self-discredited. They didn’t need assistance. They could not reliably repeat the outcomes they claimed and neither could anyone else (no reference since its so widely available – google is your friend).

    Mallove was murdered by a disgruntled tenant of a property the was cleaning. There is no evidence that the murder was linked to a murky conspiracy of ultra-capitalists (wiki it)

    Your last paragraph is surely a reference to Tesla. He didn’t invent the 20th century, and nor was he banished. He chose to become a recluse and work on his increasingly eccentric ideas. Few of which have been repeated or followed up on because they represent the outer limits of trash science.

    Your comparison of media treatment of Tesla to the situation in the middle east is not only offensive, it mischaracterises the media treatment of the Israel/Palestine conflict in the last 6 weeks. It also flies in the face of the very posts you link to, Forbes magazine being mainstream media if nothing else.

    In short, any politician awaiting the turn of good luck associated with cold fusion better also be banking on cryogenics. It may be a long time coming, if at all.

  • You talk about Pons et Fliechsman self discrediting. It is not the person that matters it is the science. Science lost in the negative publicity in trial by media. The media still haven’t fixed this some 20 years later. Conspiracy
    I am surprised by the apathy in this subject, I think this is the most important science so far. But as those that know who can read between the lines can see the economic markets are obviously so afraid of this, by their non disclosure of the most important energy breakthrough since the automobile and oil.
    Those who control the energy control the world. You have to be stupid not to see this the bankers and energy tycoons are the same people they also control the media. That is why Cold Fusion is kept hidden as it threatens their greed. Conspiracy
    It is amazing how little you know about Tesla, well turn on a light switch (AC electricity he lite the world), Turn on your TV think of Tesla (wireless transmission of the electromagnetic frequency), start your car think of Tesla (grandfather of the spark plug). Without these things we would be living a century back. His wireless transmission of electricity was not an eccentric idea and has been proven to be real. His Colorado springs experiments is some of the best suppressed science I have read, coming from real practical science. None of his ideas or theory explaining the phenomenon that was witnessed are taught, instead we get some BS theories that confuse the populace and tell us there can be no fuel from water. Now LENR shows water can be a fuel.
    Blatant mistruths Tesla discredited and labeled eccentric instead of the genius he was (no this honour goes to a theorist ), trial by media same as in Gaza the Israelis have killed so many more people then Humas. The Israeli army are war criminals only the media doesn’t tell us this. Humas just want their land and their gas field, Israel has its eyes on the Gaza gas field and the continued expansion in occupied territories, stealing land and now the gas field. But trial by media tells us Israel are in the right, while they bomb schools and hospitals.
    Cold fusion is already here the E cat is real !
    Politicians don’t want this, why do you think there is so little funding. The tax income to the government would be drastically reduced without petroleum. The world needs this technology but economists hate it.
    I wonder Ashton what you know about this subject, because your arguments are amateur.

    • I’m a huge fan of Tesla. The 6 year old had to pick a “famous person” to give a talk about last week. I taught him all about Tesla, and he told the class about Tesla on Monday. Tesla was one of the greatest geniuses ever. But he certainly also was eccentric.

      I hope that cold fusion works out someday. I’m not betting it well, but I’d certainly welcome it.

      If the E-Cat really worked, why would they have needed to go out searching for venture capital? Just set up a machine, sell electricity back into the grid until you have enough money to build a second. Say that takes N months. Once that happens, in N/2 months you’ll have enough to build a third, N/3 months to build a fourth, and the whole thing’s self-financing real quick.

  • I read the book on him. Much more interesting. Less sycophantic. Other than that, and on a more economics note, what Eric said. Successful disruptive technologies are very usually immediately accepted, not bought off and hidden by secret cabals.

  • Thank you Eric I hope cold fusion is commercialised very soon, it will change the world.
    Peace Ashton, the Cabal thing was last century it looks like this one will be more open.

  • Well the latest on the E Cat which is technology that WILL change the world and soon.
    It is going to change the whole economic situation.
    It will change the science taught in schools
    It is about time to ..
    This is the most important scientific advancement of this century, and the news isn’t talking about it.

  • nope, nothing in that that is world-changing. Lots of claims stacked on claims. No evidence of new science.

    It is potentially evidence of your greatest fear – General Electric is using a shell company to buy out a potentially gamechanging technology that threatens its position.

    In any case, no Presidential hopeful’s chances were harmed in this deal. The status quo continues.

  • Ashton were you the guy at the party who use to try and pop other peoples balloons ? You seem to miss the point.
    Ok so the status of Cold Fusion(LENR) at the moment is. Cold fusion has now been legitimised with Rossis Hot cat, by Cornell university. It is real more energy comes from it than is supplied, this is real science now. An efficient way to break the bond in the water molecule to release the power of hydrogen. So at the moment the guidelines we have tell us this is not possible. But we have now the juxtaposition of seeing in reality this is happening.”Computed volumetric and gravimetric energy densities were found to be far above those of any known chemical source. Even by the most conservative assumptions as to the errors in the measurements, the result is still one order of magnitude greater than conventional energy sources.”. If this is not science changing in action, then maybe it is like watching the ink drying in the school books of the future.
    To Eric his questions about searching out venture capital this has been answered with the above link.
    Rossis E Cat has been brought by a North Carolina company called Power Generation Services.
    Brillouin Signs Licensing Deal with Korean Firm.
    This is technology that is gearing up for production, sorry if you can’t see this from the information given, still at least you aren’t calling it Junk science any more.

  • Hi Derek. We are really outside the bounds of the original post here, so this will be my last post on the subject in this thread.

    It remains a violation of known science for Rossi’s system to operate. If it releases energy at that level, it must be producing isotopic byproducts. My understanding is that this is not occurring.

    There are any number of reasons why an item (or information) may be purchased. Additionally, the purchase is of itself not proof of a working system, or even of a theoretically workable system.

    Finally, the real proof of something changing science is its repeatability. Again, nada. Despite all the claims by Rossi, there are NO independently verified demostrably working examples of his device.


    So outside his lab, the equipment doesn’t work as described.

    Doesn’t sound promising. Again, if I were a politician looking to ride along behind this wave of luck, I’d be looking elsewhere.

    Shall we come back in 10 years time to see who’s right?

    • Plus, if it did work, then there’d be nothing stopping his firing the machine up, selling power into the grid, using returns to build second machine, and so on. Plenty of places in the world where you can sell power back into the grid.

      Imagine that I told you I had a machine that turned lead into gold. It’s a prototype, and it works, but it only can do a gram at a time. And so I was seeking venture capital to build another. Would you
      a) give me money; or,
      b) ask me why, if it can do that, I need any venture capital at all? Run the machine for a few weeks, sell the gold, build another machine.

      If your answer is a), then let me send you the prospectus for investments in my new lead-to-gold machine.

  • Ok so Rossi is one guy
    Now we have Brillioun energy
    “Los Almos National Laboratories is one of the third party organizations that conducted experiments on the NHB and concluded that the device has consistent and impressive results.”
    “Dr. Michael McKubre of Stanford Research International, an avid supporter of the LENR reaction and theory, has also tested the New Hydrogen Boiler and encountered positive results.
    He subsequently joined their board of advisers, being impressed by the consistency of the results. He stated that The Brillouin New Hydrogen Boiler was the first device that could replicate the same results multiple times, every time, with no exception.”

    You guys can’t argue with this technology, it is here it is real.

    I can find more companies but don’t think i have to, for if you seek the truth you will find it, it is an electric universe.