An interesting new research paper by Princeton Professors Alan Blinder and Mark Watson examines differences in performance of the economy under Democratic versus Republican presidents. The paper begins:
The superiority of economic performance under Democrats rather than Republicans is nearly
ubiquitous; it holds almost regardless of how you define success. By many measures, the
performance gap is startlingly large–so large, in fact, that it strains credulity, given how little
influence over the economy most economists (or the Constitution, for that matter) assign to the
President of the United States.
After documenting that the difference in economic performance between Republican and Democratic administrations is statistically significant and highly robust,
Blinder and Watson go on to investigate what accounts for the difference. They find little statistical explanatory power in any differences in monetary or fiscal policy under Democrats compared with Republicans. Instead, one of the variables that they find did seem to play a role is oil price shocks. The Suez Crisis of 1956-57, OPEC oil embargo of 1973-74, Iran-Iraq War beginning in November 1980, and Iraq’s invasion of Kuwait in 1990 all occurred during Republican terms, and all seemed to contribute to weak performance of the U.S. economy. Jimmy Carter was the one Democratic president unfortunate enough to be in office during a similar episode (the Iranian revolution in 1978-79), and ended up with one of the weakest economic records of the Democratic presidents. Although the public may end up blaming the American president for events like these, a reasonable person could well regard geopolitical conflict in the Middle East as largely beyond the power of the U.S. president to contain or control.
Another factor that the authors find quite important is variation in total factor productivity. For example, the productivity gains associated with the move to big box retailers in the 1990s appear to be a key factor in the strong economic performance during the Clinton administration. Although economists do not have a good understanding of the ultimate drivers of productivity, it again seems hard to make the case that the U.S. president is responsible for an important part of the variation.
A third factor that the researchers identify as potentially important is consumer confidence. For whatever reason, consumers on average have had a brighter outlook on the economy when a Democrat was in the White House. In Blinder and Watson’s statistical analysis, this seems to account for about a quarter of the D-R performance difference.
The authors conclude:
Democrats would no doubt like to attribute the large D-R growth gap to better
macroeconomic policies, but the data do not support such a claim….
It seems we must look instead to several variables that are mostly “good luck.” Specifically,
Democratic presidents have experienced, on average, better oil shocks than Republicans, a better
legacy of (utilization-adjusted) productivity shocks, and more optimistic consumer expectations
(as measured by the Michigan ICE).
Completed at an estimated cost of Rs.958 crore, the project is designed to produce 120 KTA of high quality styrene Butadiene Rubber which is currently imported for manufacture of automotive tyres and other applications. Commissioning of this prestigious project would significantly contribute to foreign exchange savings and also generation of employment opportunities in the state of Haryana.
and ldquo;Assuming negotiations continue and Iran adheres to its obligations under the Geneva Agreement, some of the heavy oil production that had been shut in could be restarted. Iran could be producing around 700-900 kb/d more oil by year-end 2014 than the 2.8 mb/d of oil that it is producing today, and rdquo; the bank pointed. and nbsp;
and ldquo;For the rest of the winter, we expect production growth in the country to persist barring any significant well freeze-offs in the West and the Gulf regions. Additional infrastructure additions in the Northeast, continued growth of associated gas and slowing declines at existing wells indicate that production growth next year should accelerate from this year and rsquo;s rates, and rdquo; Barclays noted.
Rabi rice is sown on an area of 1.06 lh (the figure is higher when compared to the 0.87 lh during the same period last year) followed by wheat 179.44 lh (158.46 lh), total pulses 104.97 lh (102.49 lh), coarse cereals 40.45 lh (46.15 lh) and oil seeds 69.96 lh (66.90 lh). Meanwhile, world soybean 2013-14 production is estimated up 5% year-on-year basis at 285 mn tons, said International Grains Council (IGC) in its November report.
The National Union of Mineworkers says it will meet with management for talks as revenue losses in an almost four-week strike near R400 million.
Worst November in 35 years for gold as India’s import ban forces jump in recycling, writes Adrian Ash
Billionaire Anil Agarwal says he regrets investing $8 billion on an aluminium complex in India that’s faced a shortage of raw materials.
Trimming investments will be Vale’s latest tactic to boost margins after selling at least $3 billion of assets this year and reducing costs by $2 billion.
Gold miners have endured a torrid week on the ASX, with Beadell Resources (-9.4%), Regis Resources (-2.2%) and Evolution Mining (-4.7%) all losing ground.