Party Polarization and the Business Cycle in the United States

In: Public choice, Volume 121, Issue 3-4, p. 413-430

Abstract

A large literature has studied the trend of greater polarization between Democrats & Republicans in Congress. This paper empirically examines the extent to which inflation & unemployment explain cyclical movements of polarization over time. An informal application of the standard Downsian spatial competition model of parties generates the following relationships, ceteris paribus: (1) inflation should be associated with policy convergence, (2) unemployment should be associated with polarization, (3) the effect of unemployment on polarization should be larger in magnitude than the effect of inflation on convergence, & (4) the effect of unemployment on polarization should be stronger in the House than in the Senate. We estimate the relationship between vote records & business cycle conditions, 1947-1999, using a GLS model with varying lags. Our results are broadly consistent with these business cycle hypotheses of polarization, though greater support is found in House data than in Senate data. 5 Tables, 34 References. Adapted from the source document.