Political business cycle theory

Assignment Help Macroeconomics
Reference no: EM1314074

Political business cycle: Do economic events affect presidential elections? To test this so-called political business cycle theory, Gary Smith20 obtained the following regression results based on the U.S Presidential elections for the four yearly periods from 1928 to 1980.

YΛ= 53.10 - 1.70Xt

t = (34.10) (-2.67)     r2 = 0.37

Where Y is the percentage of the vote received by the incumbent and X is the unemployment rate change - unemployment rate in an election year minus the unemployment rate in the preceding year.

1. A prior, what is the expected sign of X?

2. Do the results support the political business cycle theory? Support your contention with appropriate calculations.

3. Do the results of the 1984 and 1988 presidential elections support the preceding theory?

4. How would you compute the standard errors of b­1 and b2?

Reference no: EM1314074

Questions Cloud

Test of goodness of fit-chi square : Would it be reasonable to conclude that the population distribution is Poisson with a mean of 2.0?
Purpose a petty cash payments report for february : Purpose a petty cash payments report for February with these categories: delivery expense, mileage expense, postage expense, merchandise inventory (for transportation-in), and office supplies expense.
Different situations according solow growth model : Assume that the economy starts in steady state. According to the Solow growth model, how would each of the following affect consumption per worker in the long run, Explain?
Determining confidence interval for estimating dtata : Determine the 95% confidence interval for your estimate what data have you utilized as the basis of your predictions what suppositions have you made.
Political business cycle theory : Political business cycle: Do economic events affect presidential elections? To test this so-called political business cycle theory, Gary Smith 20  obtained the following regression results based on the U.S Presidential elections for the four yearl..
Prepare the necessary entries to clear the intangible assets : Prepare the necessary entries to clear the Intangible Assets account and to set up separate accounts For distinct types of intangibles. Make the entries as of December 31, 2007,
Tests and statistics : Test the hypothesis that no difference exists between the groups at α = .05 and perform and report all related tests and statistics.
What''s the beginning balance per the books : What's the beginning balance per the books and What are the total amounts of outstanding checks
Mean sales calls using analysis of variance : Using Analysis of Variance (ANOVA) test at 5% level if there are important differences in mean sales calls made across the three branches.

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  Specialization and gains from trade

Robin and Terry are Stranded on a deserted island and consume two products, coconuts and fish. In a day, Robin can catch 2 fishes or gather 8 coconuts, and Terry can catch 1 fish or gather 1 coconut.

  Profit maximizing level of labor

The supply curve for labor is S L = 100W, where W is the market wage. The marginal revenue product curve for the firm is D L = -50W + 450.

  Prediction of unemployment using time trend

Is this a good model for unemployment? What would you add to study the problem more completely? What assumption does this model make regarding unemployment

  Computation of arc elasticity of demand

Suppose that this price cut was completely responsible for its raise in revenues from 460 million yen in 1966 to 640 million yen in 1967. Compute the indicated arc elasticity of demand.

  Welfare effects of tariff and price difference in exporting

The Lexus LS 430, the top of the line Lexus sedan, riad a base price in Canada of C$85,700 during the fall of 2005. Restated in US dollars using the exchange rate prevailing then, that price is $71,885.

  Describe the effects of monetary policies

Describe the effects of monetary policies on the economy's production and employment.

  Equilibrium price and quantity of gasoline

The demand and supply curves for gasoline (in billions per year) are given below. Using the equations, find the initial equilibrium price and the quantity in the market for gasoline.

  Causes of the stagflation

What were some of causes of stagflation of 1973 and 1979? In what ways were these episodes of stagflation different from great depression of the 1930s?

  Expenditure function about real interest rate

Explain how the aggregate expenditure function shifts in response to changes in each of the following variables:

  Concepts of minimum wage thery and monopoly market

Explain why a monopolist will never set a price (and produce the corresponding output) at which the demand is price-inelastic.

  Computation of parity price

If the price of manufactured goods rises to $6 bushel (a rise of 50%), the parity price of corn as well rises by 50% - to $4.50 in this hypothetical example.

  Production possibilities curve for medical services

Draw a bowed-out production possibilities curve (PPC or PPF) with an aggregate measure of medical services, Q, on the horizontal axis and an aggregate measure of all other goods (and services), Z, on the vertical axis.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd