scholarly journals Independent but not indifferent: Partisan bias in monetary policy at the Fed

2018 ◽  
Author(s):  
William R. Clark ◽  
Vincent Arel-Bundock
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Weighted Average ◽  
The United States ◽  
Right Wing ◽  
Left Wing ◽  
White House ◽  
Show Evidence ◽  
The Government ◽  
Central Bankers

Independent central banks are thought to be effective inflation hawks because they are run by technocrats with conservative monetary policy preferences. However, central bankers can only protect their independence by compromising with the elected officials who grant them their independence. Policy, therefore, is likely to be a weighted average of the preferences of the central bank and the government. Consequently, central bankers may be eager to help right‐wing governments stay in power and oppose the election of left‐wing governments. We show evidence from the United States that interest rates (a) decline as elections approach when Republicans control the White House, but rise when Democrats do; and (b) are sensitive to the inflation rate (output gap) when Democrats (Republicans) are in the White House. Thus, the Federal Reserve is a conditional inflation hawk. Since the Fed became operationally independent in 1951, the Republicans have exhibited a decided electoral advantage in presidential politics.

scholarly journals Economists and White House Decisions

1992 ◽  
Vol 6 (3) ◽  
pp. 65-71 ◽  
Author(s):  
Stuart E Eizenstat
Keyword(s):  
Interest Rates ◽  
Executive Director ◽  
High Growth ◽  
The United States ◽  
Price Stability ◽  
White House ◽  
Staff Members ◽  
The Government ◽  
Domestic Affairs ◽  
Double Digit

While I served in the White House, [as Assistant to the President for Domestic Affairs and Policy and Executive Director of the White House Domestic Policy Staff from 1977–81], Ph.D. economists occupied the positions of Secretary of Labor, Secretary of Commerce, Secretary of Treasury, Director of the Council on Wage and Price Stability, the President's anti-inflation adviser, Chairman and Council Members of the Council of Economic Advisers, and many other senior positions throughout the government. Yet we presided over an economy with double-digit inflation and interest rates and a recession. Presidents of the United States and their White House Staff members expect economists to be omniscient prophets of the future course of the economy, unerring economic policy advisers, and teachers of the mysterious science of economics to often distracted pupils. They expect their economists to provide an economic blueprint for high growth, low inflation, and a guaranteed re-election—but without offending any important constituencies. What is the appropriate role for economists in the White House? What can they realistically be expected to do?

scholarly journals Intergenerational Mobility and Preferences for Redistribution

2018 ◽  
Vol 108 (2) ◽  
pp. 521-554 ◽  
Author(s):  
Alberto Alesina ◽  
Stefanie Stantcheva ◽  
Edoardo Teso
Keyword(s):  
Social Mobility ◽  
Intergenerational Mobility ◽  
The United States ◽  
Political Polarization ◽  
Right Wing ◽  
Left Wing ◽  
The United Kingdom ◽  
Preferences For Redistribution ◽  
Cross Country ◽  
The Government

Using new cross-country survey and experimental data, we investigate how beliefs about intergenerational mobility affect preferences for redistribution in France, Italy, Sweden, the United Kingdom, and the United States. Americans are more optimistic than Europeans about social mobility. Our randomized treatment shows pessimistic information about mobility and increases support for redistribution, mostly for “equality of opportunity” policies. We find strong political polarization. Left-wing respondents are more pessimistic about mobility: their preferences for redistribution are correlated with their mobility perceptions; and they support more redistribution after seeing pessimistic information. None of this is true for right-wing respondents, possibly because they see the government as a “problem” and not as the “solution.” (JEL D63, D72, H23, H24, J31, J62)

Interpreting the Reagan Deficits

2017 ◽  
Author(s):  
Thomas J. Sargent
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Reagan Administration ◽  
Federal Budget ◽  
Ronald Reagan ◽  
Government Budget ◽  
Government Deficits ◽  
Tax Smoothing ◽  
The Government ◽  
Monetary And Fiscal Policy

This chapter examines the large net-of-interest deficits in the U.S. federal budget that have marked the administration of Ronald Reagan. It explains the fiscal and monetary actions observed during the Reagan administration as reflecting the optimal decisions of government policymakers. The discussion is based on an equation whose validity is granted by all competing theories of macroeconomics: the intertemporal government budget constraint. The chapter first considers the government budget balance and the optimal tax smoothing model of Robert Barro before analyzing monetary and fiscal policy during the Reagan years: a string of large annual net-of-interest government deficits accompanied by a monetary policy stance that has been tight, especially before February 1985, and even more so before August 1982. Indicators of tight monetary policy are high real interest rates on government debt and pretax yields that exceed the rate of economic growth.

Housing Prices and Government Approval: The Impact of Housing Booms on Left- and Right-Wing Governments in 16 Advanced Industrialized Countries

2021 ◽  
Vol 54 (1) ◽  
pp. 163-185
Author(s):  
Sung Min Han ◽  
Mi Jeong Shin
Keyword(s):  
Housing Prices ◽  
Right Wing ◽  
Industrialized Countries ◽  
Left Wing ◽  
Approval Ratings ◽  
The United Kingdom ◽  
Level Data ◽  
Left And Right ◽  
The Government ◽  
The Impact

AbstractIn this article, we argue that rising housing prices increase voter approval of incumbent governments because such a rise increases personal wealth, which leads to greater voter satisfaction. This effect is strongest under right-wing governments because those who benefit from rising prices—homeowners—are more likely to be right-leaning. Non-homeowners, who are more likely to vote for left-leaning parties, will view rising housing prices as a disadvantage and therefore feel the government does not serve them well, which will mitigate the advantage to left-wing governments. We find support for our arguments using both macro-level data (housing prices and government approval ratings in 16 industrialized countries between 1960 and 2017) and micro-level data (housing prices and individuals’ vote choices in the United Kingdom using the British Household Panel Survey). The findings imply that housing booms benefit incumbent governments generally and right-wing ones in particular.

scholarly journals South Africa’s economic response to monetary policy uncertainty

2017 ◽  
Vol 44 (2) ◽  
pp. 282-293 ◽  
Author(s):  
Mehmet Balcilar ◽  
Rangan Gupta ◽  
Charl Jooste
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Stochastic Volatility ◽  
Stochastic Volatility Model ◽  
Economic Consequences ◽  
Policy Uncertainty ◽  
Dsge Model ◽  
Content Type ◽  
Volatility Model ◽  
Central Bankers

Purpose The purpose of this paper is to study the evolution of monetary policy uncertainty and its impact on the South African economy. Design/methodology/approach The authors use a sign restricted SVAR with an endogenous feedback of stochastic volatility to evaluate the sign and size of uncertainty shocks. The authors use a nonlinear DSGE model to gain deeper insights about the transmission mechanism of monetary policy uncertainty. Findings The authors show that monetary policy volatility is high and constant. Both inflation and interest rates decline in response to uncertainty. Output rebounds quickly after a contemporaneous decrease. The DSGE model shows that the size of the uncertainty shock matters – high uncertainty can lead to a severe contraction in output, inflation and interest rates. Research limitations/implications The authors model only a few variables in the SVAR – thus missing perhaps other possible channels of shock transmission. Practical implications There is a lesson for monetary policy: monetary policy uncertainty, in isolation from general macroeconomic uncertainty, often creates unintended adverse consequences and can perpetuate a weak economic environment. The tasks of central bankers are incredibly difficult. Their models project output and inflation with relatively large uncertainty based on many shocks emanating from various sources. It matters how central bankers react to these expectations and how they communicate the underlying risks associated with setting interest rates. Originality/value This is the first study that looks into monetary policy uncertainty into South Africa using a stochastic volatility model and a nonlinear DSGE model. The results should be very useful for the Central Bank as it highlights how uncertainty, that they create, can have adverse economic consequences.

scholarly journals Economic Growth, Policies and Influencing Factors: The Case of Albania

2016 ◽  
Vol 4 (1) ◽  
pp. 107
Author(s):  
Eleni Vangjeli ◽  
Anila Mancka
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Fiscal Policy ◽  
Interest Rates ◽  
Empirical Analysis ◽  
Influencing Factors ◽  
Fiscal Policies ◽  
The Government ◽  
High Level ◽  
The Empirical Analysis

Monetary and fiscal policies are two policies that the government could use to keep a high level of growth, with a low inflancion. Fiscal policy has its initial impact on the stock market, while monetary policy in market assets. But, given that the goods and active markets are closely interrelated, both policies, monetary as well as fiscal have impact on the economy, increasing the level of product through the reduction of interest rates. In our paper we will show how functioning monetary and fiscal policies. But also in our paper we will analyze the different factors which have affected the economic growth of the country. The focus of our study is the graphical and empirical analysis of economic growth, policies and influencing factors. For the empirical analysis we have used data on the economic growth in Albania for 1996– 2014.

The Trilateral Era

Worldview ◽  
1980 ◽  
Vol 23 (8) ◽  
pp. 21-23
Author(s):  
Jeremiah Novak
Keyword(s):  
Western Europe ◽  
The United States ◽  
Right Wing ◽  
Left Wing ◽  
Jimmy Carter ◽  
Henry Kissinger ◽  
George Bush ◽  
The Past ◽  
Corporate Executives ◽  
The U.S

For the past four years right-wing and left-wing organizations in the United States have been aware of a new foreign policy establishment known as the Trilateral Commission. This group, founded by David Rockefeller, is comprised largely of corporate executives from Western Europe, Japan, and the U.S. Jimmy Carter, Walter Mondale, Zbigniew Brzezinski, and Cyrus Vance, as well as seventeen other members and former members of the Carter administration, belonged to this group before they took office. Key political figures in the governments of Japan and Western Europe also belong, as do John Anderson, George Bush, and Henry Kissinger.

scholarly journals Does Government Support Respond to Governments’ Social Welfare Rhetoric or their Spending? An Analysis of Government Support in Britain, Spain and the United States

2017 ◽  
Vol 49 (4) ◽  
pp. 1407-1429 ◽  
Author(s):  
Luca Bernardi ◽  
James Adams
Keyword(s):  
United States ◽  
Social Welfare ◽  
Public Support ◽  
The United States ◽  
Government Support ◽  
Right Wing ◽  
Left Wing ◽  
Cross Sectional ◽  
Welfare Spending ◽  
Left And Right

Issue ownership theory posits that when social welfare is electorally salient, left-wing parties gain public support by rhetorically emphasizing social welfare issues. There is less research, however, on whether left-wing governing parties benefit from increasing social welfare spending. That is, it is not known whether leftist governments gain from acting on the issues they rhetorically emphasize. This article presents arguments that voters will not react to governments’ social welfare rhetoric, and reviews the conflicting arguments about how government support responds to social welfare spending. It then reports time-series, cross-sectional analyses of data on government support, governments’ social welfare rhetoric and social welfare spending from Britain, Spain and the United States, that support the prediction that government rhetoric has no effects. The article estimates, however, that increased social welfare spending sharply depresses support for both left- and right-wing governments. These findings highlight a strategic dilemma for left-wing governments, which lose public support when they act on their social welfare rhetoric by increasing welfare spending.

Debating or displaying political positions?

2018 ◽  
Vol 9 (4) ◽  
pp. 571-597 ◽  
Author(s):  
Helmut Gruber
Keyword(s):  
Third Party ◽  
Right Wing ◽  
Left Wing ◽  
Government Program ◽  
Parliamentary Debates ◽  
Inaugural Speech ◽  
Global Discourse ◽  
The Government ◽  
Global And Local ◽  
Discourse Units

Abstract This paper investigates the reference statements and rhetorical functions of politicians’ reactive (“uptaking”) statements in parliamentary debates as well as their self-positioning effects. Uptaking moves may be used by speakers for pursuing strategic, global discourse aims. The specific properties of such ‘uptaking’ utterances and their sequential embedding in the unfolding discourse provide analysts with cues of speakers’ global interactional goals. Results indeed show how global and local pragmatic factors impact content, form, and rhetorical function of MPs’ uptaking statements. The data comprises four Austrian parliamentary sessions, which follow the inaugural speech each newly appointed Austrian chancellor has to deliver in the Austrian national assembly at the beginning of a legislative term. Overall, four fifths of the uptaking discourse units (consisting of ‘reference to previous statement plus comment’) refer to the government program, the inaugural speech or a previous MPs’ statement. Whereas a closer investigation of the reference statements seems to indicate a left wing vs. right wing rhetorical pattern (with left wing and center parties referring to ‘official’ sources, while right wing parties set their own topical agenda), investigating the rhetorical functions of the uptaking discourse units reveals a clear government vs. opposition (but no party-specific) rhetoric: Government party MPs praise the government program (or the inaugural speech), opposition party speakers criticize it. Both groups thus focus on the interpersonal plain of interaction. In contrast, argumentative (or counter-argumentative) uptaking discourse units which would indicate speakers’ willingness to enter into a rational discourse (in a Habermasian sense) with their political opponents are extremely rare. Through their rhetorical activities, the vast majority of government and opposition speakers thus reinforce and perpetuate already known political stances and affiliations in front of a third party (i.e. the general public watching the debates via TV or Internet livestream) rather than presenting themselves as rational, problem-focused politicians.

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