ECON 4999 - political parties and the business cycle - compatible

ECON 4999 - political parties and the business cycle - compatible

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3. Preliminary Evidence How do we know that the model is consistent with what actually occurs in the United States?
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Two ways: The growth of Gross National product The supply growth of money
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Gross National Product Democratic Administrations During the first half of all the democratic administration’s terms, the average growth rate of GNP was 5%. During the second half, the average fell to 3.9% Republican Administrations Throughout the first half of all the republican administrations, the average GNP growth rate was a mere 1.2%. During the second half of the terms, it was 4%
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Why? There is some lag time involved with policy change. A few months after the election of every republican administration, a recession has started (during this particular time period) This is not true of Democratic administrations and contradicts the predictions of the PBC Republican’s are much more focused on foreign policy where such as foreign relations, trade, ect… Democrats are more concerned with domestic policies which leads to economic growth
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ECON 4999 - political parties and the business cycle - compatible

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