1 Introduction
2 Literature review
3 Economic model
3.1 The expectations-augmented Taylor rule
3.2 Political pressure
4 Data
Year | Congress | President | Senate (100) | House (435) |
---|---|---|---|---|
Jan 2005–Dec 2006 | 109th | R | R-55 | R-232 |
Jan 2003–Dec 2004 | 108th | R | R-51 | R-229 |
Jan 2001–Dec 2002 | 107th | R | D\(^\mathrm{a}\)
| R-221 |
Jan 1999–Dec 2000 | 106th | D | R-55 | R-223 |
Jan 1997–Dec 1998 | 105th | D | R-55 | R-228 |
Jan 1995–Dec 1996 | 104th | D | R-52 | R-230 |
Jan 1993–Dec 1994 | 103rd | D | D-57 | D-258 |
Jan 1991–Dec 1992 | 102nd | R | D-56 | D-267 |
Jan 1989–Dec 1990 | 101st | R | D-55 | D-260 |
Jan 1987–Dec 1988 | 100th | R | D-55 | D-258 |
5 Results and discussion
Base |
p = 3 months |
p = 6 months |
p = 9 months | |
---|---|---|---|---|
Intercept | 3.475 | 2.604 | 1.350 | 1.601 |
(2.593) | (2.708) | (4.477) | (4.751) | |
\(E_t \pi _{t+1} -\pi ^{*}\)
| 0.253\(^{***}\)
| 0.305\(^{***}\)
| 0.218\(^{**}\)
| 0.208\(^{**}\)
|
(0.087) | (0.079) | (0.097) | (0.104) | |
\(E_t u_{t+1} -E_t u_{t+1}^*\)
| −0.572\(^{**}\)
| −0.539\(^{*}\)
| −0.520\(^{*}\)
| −0.518 |
(0.291) | (0.288) | (0.303) | (0.324) | |
AR (1) | 0.971\(^{***}\)
| 0.968\(^{***}\)
| 0.970\(^{***}\)
| 0.973\(^{***}\)
|
(0.031) | (0.031) | (0.035) | (0.033) | |
Before \(B_{p}\)
| 5.898 | 9.698 | 6.443 | |
(28.942) | (13.480) | (9.654) | ||
\(B_{p}\times (E_t \pi _{t+1} -\pi ^{*})\)
| −1.033 | 0.305 | 0.036 | |
(5.516) | (0.583) | (0.282) | ||
\(B_{p}\times (E_t u_{t+1} -E_t u_{t+1}^*)\)
| 0.378 | −0.810 | 0.224 | |
(7.339) | (2.398) | (0.999) | ||
After \(A_{p}\)
| −2.397 | 6.900 | 2.239 | |
(18.756) | (8.998) | (5.710) | ||
\(A_{p}\times (E_t \pi _{t+1} -\pi ^{*})\)
| −3.448 | −0.051 | 0.375 | |
(2.827) | (0.338) | (0.384) | ||
\(A_{p}\times (E_t u_{t+1} -E_t u_{t+1}^*)\)
| −1.595 | −0.882 | −0.569 | |
(2.238) | (0.894) | (0.674) | ||
Observations | 222 | 222 | 222 | 222 |
Log likelihood | −47.660 | −43.091 | −44.464 | −46.113 |
\(\alpha \)
|
\(\beta \)
| |||
---|---|---|---|---|
(a) | Base model | 0.253\(^{***}\)
| −0.572\(^{**}\)
| |
(b) |
\(P = 0\)
| Republican Presidency | 0.266\(^{***}\)
| −0.507 |
\(P = 1\)
| Democratic Presidency | 0.090 | −0.439 | |
(c) |
\(D = 0\)
| Non-Democratic controlled Congress | −0.018 | −1.188\(^{**}\)
|
\(D = 1\)
| Democratic controlled Congress | 0.488\(^{***}\)
| −0.341 | |
(d) |
\(R = 0\)
| Non-Republican controlled Congress | 0.410\(^{***}\)
| −0.279 |
\(R = 1\)
| Republican controlled Congress | 0.021 | −1.134\(^{**}\)
| |
(e) |
\(P\times D = 0\)
| No Full Democratic control | 0.259\(^{***}\)
| −0.513\(^{*}\)
|
\(P\times D = 1\)
| Full Democratic control | 0.013 | −1.653 | |
(f) |
\((1-P)\times R = 0\)
| No Full Republican control | 0.395\(^{***}\)
| −0.313 |
\((1-P)\times R = 1\)
| Full Republican control | 0.039 | −2.025\(^{**}\)
| |
(g) |
\(H = 0\)
| No “hung” Congress | 0.038 | −2.072\(^{***}\)
|
\(H = 1\)
| “Hung” Congress | 0.410\(^{***}\)
| −0.180 |