ECONOMIC VOTING DYNAMICS: ELECTORAL IMPLICATIONS OF MONETARY POLICY SHIFTS AND PARTISAN POLICY
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This dissertation makes contributions to the economic voting literature in relation to the monetary policy trade-off in two interrelated aspects. First, it refines the Rational Partisan Theory by developing a special case of the policy rule to the existing discretionary policy assumption. The refinement provides a macroeconomic interpretation of the diminished effects of inflation in congressional midterm elections since the early 1980s as a result of the policy shift to inflation targeting (an understudied area in political science). As a consequence of stabilized inflation, the inflation-unemployment policy trade-off has broken down, resulting in unemployment being the sole monetary policy component that is electorally relevant. The study’s second contribution is its empirical insight on the poorly understood electoral effects of unemployment through the less common analysis of objective unemployment data. The findings based on county unemployment for presidential elections of 1980–2012 provide strong evidence of the moderation effects of socioeconomic status of the electorate on the partisan effects of unemployment. From the intellectual perspective, the study uncovers important behavioral patterns from the macro data that can inform the development of an economic voting theory on unemployment policy at the macro-level. Additional explanatory variables would need to be considered for the large variations in the behavior among different income groups, especially under high unemployment, for the retrospection of the Democratic incumbent party. Factors such as the types of job created and social expenditures (in particular, unemployment benefits) may be useful in developing a realistic theory. On the broader impacts, the disadvantage of the Republican Party with respect to unemployment is not limited to the low income voters but also the large middle class. At the same time, the advantage of the Democratic Party is relatively weak among the middle income counties with high levels of unemployment. The key policy and electoral implication of the findings is that, under stabilized inflation, the electoral politics of the unemployment policy of the two parties need to be more inclusive and less clientelistic. This can be achieved by reaching out to the middle income voters by the political parties.