Tuesday, April 8, 2008

More on Partisan Business Cycles

The other day, I attacked some major flaws I found in a graph which shows that income growth improves for everyone under Dem Presidents while it decreases for all but the rich under Republican Presidents.

I noticed today that both the Great Tyler Cowen and Alex Tabarrok have posted further on this phenomenon, which has been well known and fully explained for quite some time in economist circles. Bottom line, according to Cowen and Tabarrok: it all has to do with a combination of economic certainty and with the willingness of the Fed to pursue anti-inflationary measures under Republican Presidents.

If this is accurate, by the way, then it is a strong argument in favor of McCain over Obama, as inflation is becoming a major concern in our economy, while unemployment is still at low levels largely unheard of prior to the 90s.