Forecasting presidential elections: A comparison of naive models

Our primary aim is to forecast, rather than explain, presidential election results, using aggregate time series data from the post-World War II period. More particularly, we seek prediction of the presidential winner well before the election actually occurs. After comparing the performance of several naive blvariate models based on economic performance, international involvement, political experience, and presidential popularity, we go on to formulate a multivariate model. This economy-popularity regression model rather accurately forecasts the winner 6 months in advance of the election, by employing spring measures of presidential popularity and the growth rate in real GNP per capita. Furthermore, the model's performance, both ex post facto and prior to the election, compares favorably with the Gallup final preelection poll taken only a few days before the election.     

Bias in OMB's economic forecasts and budget proposals

The Office of Management and Budget (OMB) annually submits the President's budget for the U.S. government to the Congress. The economic forecasts and revenue and outlay proposals contained in the budget have been criticized as biased, especially during the 1980s. Tests for bias in one year ahead proposals for the 1963–89 period show no bias in economic forecasts and revenue estimates, but substantial bias in outlay proposals. Most outlay proposals are consistently less than actual outcomes, accounting for underprediction of the Federal deficit. OMB outlay proposals appear to be influenced by politics. Republican administrations show more significant proposal biases, with defense proposals higher and domestic outlay proposals lower than outcomes. The Office of Management and Budget consistently understates the deficits by resorting to the most optimistic economic assumptions it can credibly — and now sometimes even incredibly — employ. — Senator James SasserWall Street Journal, 25 January 1990     

On the political economy of national tax revenue forecasts: evidence from OECD countries

Sustainable budgets are important quality signals for the electorate. Politicians might thus have an incentive to influence tax revenue forecasts, which are widely regarded as a key element of national budget plans. Looking at the time period from 1996 to 2012, we systematically analyze whether national tax revenue forecasts in 18 OECD countries are biased due to political manipulation. Drawing on theories from the field of political economy, we test three hypotheses using panel estimation techniques. We find support for partisan politics. Left-wing governments seem to produce more optimistic, or less pessimistic, tax revenue forecasts than do right-wing ones. Contrary to the theoretical prediction based on the “common pool” problem, we find that more fragmented governments and parliaments tend to produce more pessimistic, or less optimistic, tax revenue forecasts. We find no empirical evidence that political business cycles play a role in tax revenue forecasts.     

The Congress and fiscal policy

Although the common belief is that the Congress has paid little attention to fiscal policy, the same kinds of political-economic models which have been used to explain presidential budgetary policy may be used equally well to explain congressional budgetary behavior. The Congress' fiscal policy appears to be systematically sensitive to both economic and political factors. Changes in the unemployment rate have a major impact on congressional budgetary policy. As for political factors, the President's lead is followed most closely on revenue proposals and not at all on the expenditure side. The electoral cycle, in particular the off-year congressional election year, is also important; inducing larger deficits and smaller increases in revenues. When the influences on congressional fiscal behavior are compared with those on presidential behavior, the sources of the generally more expansionary congressional fiscal policy are identified. Congressional budget deficits increase in response to increased rates of unemployment but are insensitive to increases in inflation. In contrast, presidential budgets are heavily influenced by inflation and the growth in personal income — increases in each resulting in smaller proposed deficits — as well as by unemployment rates. In years in which both unemployment and inflation are increasing, the combination of the two (assuming a one percentage point change in each) implies an increase in the congressional deficit of $6.7 billion but a decrease in the president's proposed deficit of $2.5 billion. The implications of this study are a challenge to the literature which makes the President the central actor in macro-economic policy.     

Do conditional cash transfer programs shift votes? Evidence from the Honduran PRAF

How do national social programs influence local voting? This study utilizes the experimental set up of a conditional cash transfer program to show that small, targeted cash transfers can have large electoral effects. The Honduran PRAF program allocated an average of $18 per capita per year to poor households within municipalities that were randomly assigned to receive the program. Although the program was administered at the national level, the program increased an incumbent mayor's re-election probabilities by 39%, without significantly influencing voting behavior in presidential elections. Moreover, the evidence suggests that transferring cash to poor households were more effective at increasing political support than interventions providing public goods for poor villages.     

Whom do you trust? An analysis of executive and congressional economic forecasts

Economic forecasts play an increasing role in U.S. budgetary and fiscal policies. This paper analyzes the accuracy and bias of economic forecasts prepared by the Executive Branch and Congress. Short-run forecasts by the Executive Branch for the forthcoming year do not appear biased. They are as accurate as private forecasts and the forecasts of the Congressional Budget Office (CBO); they are not sensitive to political factors such as the size of the deficit. At the same time, the accuracy of Executive branch's short-run economic forecasts has not improved over the period from 1962 to 1984, and the forecasts themselves can be well approximated by simple, single-equation models that use a small number of variables. In contrast to short-run forecasts, long-run economic forecasts of both the Executive branch and CBO are consistently optimistic. The degree of optimism increases with the length of the forecasting horizon and the degree of fiscal pressure the year in which they are issued. The Reagan Administration's long-run forecasts, while typically optimistic, have not been rosier than those issued under previous administrations.     

Vom Rand in die Mitte – „Schamlose Normalisierung“

In this paper, I discuss the swing to the (far-)right in (Austrian) party politics during the election campaign and national election on October 15, 2017. This transformation is caused, I claim, by a process of normalisation, an accommodation to the, sometimes also extreme-right, agenda of formerly right-wing populist parties such as the Austrian Freedom Party (FPÖ). The election campaign of both the Austrian People’s Party (ÖVP) and the FPÖ focussed primarily on migration and refugee politics, based on a politics of fear and resentment. After first attempting to define the phenomenon of right-wing populism, I trace how tabooed and extreme right contents slowly became acceptable, as soon as the ÖVP shamelessly integrated some (not all) aspects of the FPÖ’s election program.     

The Political Determinants of Federal Expenditure at the State Level

It has been shown that states with higher per capita senate representation have higher federal spending per capita (Atlas, C. M., Gilligan, T. A., Hendershott, R. J. and Zupan, M. A. (1995). American Economic Review 85: 624–629). With a more recent data sample, more highly disaggregated data and a different set of political control variables, we are able to confirm the main result of Atlas et al. that per capita senate representation is positively related to federal expenditure. This effect is strongest for procurement expenditures. By contrast, we do not find support for their result that spending increases with per capita representation in the House of Representatives. Several other political variables are found to be significant in a subset of the expenditure equations.     

Politischer Opportunismus und Haushaltsdefizite in den westdeutschen Bundesländern

This article analyzes fiscal political business cycles in the West-German Länder. By linking the theory of political business cycles with the insights of the theory of economic voting, I argue that the German Länder governments do not have an incentive to raise the budget deficit in order to signal economic competence to the electorate. Despite having an incentive to spend more before an election in order to provide public goods to the voters, governments cannot finance the supply of public goods with higher deficits because voters prefer healthy fiscal policies. An empirical analysis of the West-German Länder between 1970 and 2003 bolsters the theoretical claims. A government that expands the deficit before an election thus experiences a loss in voter support. Consequently, governments tend to reduce the budget deficit in pre-election years.     

Treated politicians,treated voters: A natural experiment on political budget cycles

Although pre-electoral political manipulation of the budget — the political budget cycle (PBC) — has been long investigated by scholars, empirical findings are mixed at best. This is partly because of the non-random nature of election timing. There also exist ongoing debates over how the budget is manipulated for electoral purposes. We address these issues by exploiting a natural experiment in Japan, where the timing of both executive and legislative elections in municipalities is fixed, staggered, and as good as random, and by using the detailed items of the municipal budget. We find that total and capital expenditures follow the PBC, but tax revenue does not. We also find that executive elections are associated with the PBC, but legislative elections are not. Against the conventional wisdom that democratic or developed countries are free from the PBC, our case of Japan offers an intriguing exception.     

Fiscal Planning, Budgeting, and Rebudgeting Using Revenue Semaphores

Revenue forecasts play an important role in the state government budget and policy process. These forecasts are generally reported to executive and legislative leaders as point estimates, with no acknowledgment of their corresponding risk and uncertainty. The revenue semaphores proposed in this article outline procedures by which revenue uncertainty directly influences the planning process. The goal is not to make forecasts more accurate, but to make discussions of budget and revenue alternatives more comprehensive. Explicitly incorporating risk and uncertainty measures into the budgeting process increases the degree of real-time budgeting and reduces some adverse effects of budget revisions after the fiscal year begins. The discussion occurs in the context of budget control, management, and policy making.     

A mixed blessing for the left? Early voting,turnout and election outcomes in Norway

Is there a relationship between turnout and election outcomes? Although this is a classic topic in political science, most studies on multiparty systems have important theoretical and empirical shortcomings. First, we argue that the proper implication of the theoretical argument that underpins research on the turnout-vote nexus is that high levels of turnout should typically benefit both traditional social democratic parties and parties of the radical right relative to other types of parties, including not only those of the traditional right, but also ‘left-libertarian’ parties. Second, few have studied the relationship between turnout and election outcomes with a research design that is appropriate for causal inference. In our empirical study, our identification strategy is to exploit a Norwegian reform of early voting rules as an exogenous source of variation in turnout. Our theoretical expectations are largely borne out in our empirical results.     

The effects of party competition on budget outcomes: Empirical evidence from local governments in Spain

This paper investigates the link between local budget outcomes and the intensity of party competition, measured as the margin of victory obtained by the incumbent in the previous local election (i.e. the difference between the vote share and 50%). Two competing hypotheses are tested in the paper. On the one hand, the Leviathan government hypothesis suggests that the lower the intensity of party competition is, the greater is the increase in the size of the local public sector, irrespective of the ideology of the party in power. On the other hand, the Partisan government hypothesis suggests that the incumbent will find it easier to advance its platform when intensity of competition is low (i.e., parties on the left/right will increase/decrease the size of the local public sector when the intensity of the challenge from the opposition is low). These hypotheses are tested with information on spending, own revenues and deficit for more than 500 Spanish local governments over 8 years (1992–1999), and information on the results of two local electoral contests (1991 and 1995). The evidence favors the Partisan hypothesis over the Leviathan one. We found that, for left-wing governments, spending, taxes and deficits increased as the electoral margin increases; whereas, for right-wing governments, a greater margin of victory led to reductions in all these variables.     

Pivotal power brokers: Theory and evidence on political fundraising

This study examines the campaign fundraising success of Senate incumbents that have a unique, pivotal status (legislatively) in the Senate with regards to parliamentary procedures (e.g., the filibuster). Regression estimates place the fundraising advantage, in favor of certain pivotal moderates over all other Senators, at about $2.12 million (in real terms) in total contribution per 2-yr election cycle. Pivotal status is even more significant in explaining variations in PAC contribution in the U.S. Senate, given that individuals who make contributions are not likely to be as interested as PACs in ‘buying policy.’ The results also suggest that Krehbiel’s Pivotal Politics (Krehbiel, K. (1988). Pivotal Politics: A Theory of U.S. lawmaking. Chicago, IL: University of Chicago press.) construct warrants modification, given that it offers prediction about policy outcomes and gridlock intervals without fully incorporating interest group politics of the ‘vote-buying’ or ‘policy-buying’ variety.     

Public service reductions associated with placement of homeless persons with severe mental illness in supportive housing

Abstract

This article assesses the impact of public investment in supportive housing for homeless persons with severe mental disabilities. Data on 4,679 people placed in such housing in New York City between 1989 and 1997 were merged with data on the utilization of public shelters, public and private hospitals, and correctional facilities. A series of matched controls who were homeless but not placed in housing were similarly tracked.

Regression results reveal that persons placed in supportive housing experience marked reductions in shelter use, hospitalizations, length of stay per hospitalization, and time incarcerated. Before placement, homeless people with severe mental illness used about $40,451 per person per year in services (1999 dollars). Placement was associated with a reduction in services use of $16,281 per housing unit per year. Annual unit costs are estimated at $17,277, for a net cost of $995 per unit per year over the first two years.     

Forecasting the Presidential Vote in the States, 1948-2004

SUMMARY

This research updates, revises, and extends a forecasting equation of the presidential vote in the states. The original equation was composed of sixteen predictors available well before the election and estimated with data from 531 state elections from 1948 to 1988. The equation was empirically strong, based on objective predictors, and more parsimonious than previous equations. Reexamining the equation with 200 additional state elections from 1992, 1996, 2000, and 2004 indicates that the equation remains well supported, but suggests several opportunities for improvement. A revised equation has a mean absolute error of 3.2 percentage points and correctly predicts 87 percent of all electoral votes. The extension of the analysis adapts the forecast equation to predict electoral vote winners, conducting a logit analysis that takes into account both the size of the state and the closeness of its previous election. This produces more accurate forecasts of both electoral vote winners in the states and the division of the aggregate national electoral vote.     

Nationally poor,locally rich: Income and local context in the 2016 presidential election

When social scientists examine relationships between income and voting decisions, their measures implicitly compare people to others in the national economic distribution. Yet an absolute income level (e.g., $57,617 per year, the 2016 national median) does not have the same meaning in Clay County, Georgia, where the 2016 median income was $22,100, as it does in Old Greenwich, Connecticut, where the median income was $224,000. We address this limitation by incorporating a measure of one's place in her ZIP code's income distribution. We apply this approach to the question of the relationship between income and whites' voting decisions in the 2016 presidential election, and test for generalizability in elections since 2000. The results show that Trump's support was concentrated among nationally poor whites but also among locally affluent whites, complicating claims about the role of income in that election. This pattern suggests that social scientists would do well to conceive of income in relative terms: relative to one's neighbors.     

The shadow economy and sustainable development: The role of financial development

This paper provides fresh evidence concerning the threshold relationship between the shadow economy and financial development. Shadow economy is quoted as an obstacle to sustainable development and therefore the role of financial development is examined in this paper to tackle the issue of shadow economy. It is based on panel data of 29 developed and developing countries over the period of 1975–2015 and use of panel threshold model. Three proxies for financial development—liquid liabilities, private credit to deposit money banks, and stock market capitalisation—were utilised to obtain the threshold value of US$33,600 Gross Domestic Product (GDP) per capita. This threshold helps to determine the impact of financial development on the size of the shadow economy. Empirical results suggest that above this threshold, financial development significantly contributes to the reduction in size of the shadow economy while it has no impact for countries that have per capita income below this threshold. This implies that, countries with lower per capita income (below $33,600) should implement policies to improve accessibility to finance and credit market which leads to a sufficiently higher per capita income that in turn allows for a reduction in the size of the shadow economy.     

On “Group size and the free-rider hypothesis: Another hypothesis.” by Jody W. Lipford: Comment

This paper develops a positive approach to grant design when the central government and a lobby of local governments are the main agents. It develops the hypothesis that the regressivity or progressivity of per capita grants regarding community size is,ceteris paribus, related to the structure of the lobbying activities of local governments and is independent of hypothetical economies or diseconomies of scale in the production of local public goods. An encompassing lobby organisation using a “one mayor one vote” system of representation supports the regressivity of per capita grants while under “proportional” representation the lobby will support a design of per capita grants which is progressive towards community size. An empirical analysis of lump-sum grants in Portugal supports the politico-economic hypothesis and rejects the hypothesis that economies of scale is the main explanatory cause for the observed regressivity of per capita grants.     

The Political Budget Cycle and Subnational Debt Expenditures in Federations: Panel Data Evidence from India

What political variables explain variations in subnational fiscal expenditures on interest payments on the debt? The author argues that the political budget cycle and center‐right political party ideology—rather than the effective number of parties, alternation of power, ideological proximity between the central government and constituent units, or most forms of political party ideology—can help explain the level of expenditures on interest payment of subnational debt in India. The core empirical finding is that significant increases in expenditures on the debt occur the year in which a state assembly election is held in India.