Partisan Politics, Divided Government, and the Economy

Integrates economics and politics, theory and econometrics, to provide the first coherent and general formal model of US political economy. Addresses formal tests of rationality in voting behaviour and rational voter behaviour when the executive and legislature are chosen simultaneously. Blends game theory, macroeconomics, voting theory, and econometrics.

This book develops an integrated approach to understanding the American economy and national elections. Economic policy is generally seen as the result of a compromise between the President and Congress. Because Democrats and Republicans usually maintain polarised preferences on policy, middle-of-the-road voters seek to balance the President by reinforcing in Congress the party not holding the White House. This balancing leads, always, to relatively moderate policies and, frequently, to divided government. The authors outline the rational partisan business cycle, where Republican administrations begin with recessions, and Democratic ones with expansions, and the midterm cycle, where the President's party loses votes in the midterm congressional election. The book argues that both cycles are the result of uncertainty about the outcome of presidential elections. Other topics covered include retrospective voting on the economy, coat-tails, and incumbency advantage.