A presidential vote function and a presidential approval ratings function are jointly estimated for U.S. post-war observations. The estimation technique treats the two equations as seemingly unrelated regressions with unequal numbers of observations. Cross-equation restrictions implying that voters and poll respondents use identical standards in judging the economic performance of incumbents are imposed and tested. Estimates show that both votes and approval ratings are influenced by GNP growth and inflation. The results suggest that poll respondents are more inflation averse than voters; however, tests of this hypothesis are not conclusive.

The article focuses on the relationships between the macroeconomic performance of political administration and their popularity or vote getting ability. All of the studies that has been performed to analyze the relationships agree that votes and popularity can be explained well by models which suppose that voters judge policy makers on the basis of retrospective evaluation of past macroeconomic outcomes. While conventional popularity functions assume that voters simply punish inflation and reward output or low unemployment, voters who understand the long and short run relationships noted above would evaluate policymakers differently. Inflation in a given period is largely determined by past expectations of inflation, which cannot easily be controlled by current policy choices. The results of a study done by the author, show that data on presidential popularity are consistent with the hypothesis that voters are concerned with the future consequences of current economic policy choices and are aware of the nature of constraints imposed by economic reality.

Full-information maximum likelihood (FIML) estimates of the simultaneous probit-Tobit (SPT) model suggest that effects of campaign contributions on voting are smaller than single equation probit estimates would indicate. The author has generally unable to conclude that contributions have a significant impact on voting decisions, apparently votes are most often decided on the basis of personal ideology or preferences of constituents. These findings differ markedly from earlier results of economists Gary C. Durden and Jonathan J. Silberman, whose single equation models showed a substantial impact of contributions on voting decisions. Despite the lack of significance according to model SPT, it would not, however, be appropriate to unambiguously conclude that contributions have no effects on voting. For six of eight coefficients the anticipated positive sign resulted and one coefficient remained marginally significant. The article also shows that the lack of significance is attributable not only to smaller coefficient size, but also to larger standard errors. The FIML estimates of the contribution coefficients are not very precise.

Although the nature of the differences between parties in democratic electoral politics is an enduring question in political science, surprisingly little is understood about the subject. But substantial progress has been made in recent years, most notably in understanding party differences in macroeconomic policies and outcomes. The first breakthrough was Douglas Hibbs's (1977) analysis of party-related differences in the unemployment rate. In his time-series analysis for the United States, Hibbs modeled the path of unemployment as an autoregressive-moving average process subject to a dummy variable intervention term indicating party of the president. His analysis indicated that Democratic administrations were associated with lower unemployment than Republicans by 2.36 points after eight years in office, and even larger differences in long-run equilibrium. A subsequent article by Nathaniel Beck (1982) addressed the same issue, and found the party differences less sharp when administration-specific policy differences are considered. The techniques employed by Hibbs and Beck focus directly on an outcome (unemployment), rather than on the policy instruments that are presumably responsible for altering outcomes. This approach can be misleading when there are long lags between implementation of policies and ultimate effects, or when shocks occasionally intrude upon the regular connections between instruments and outcomes. Macroeconomic theories can provide information about constraints linking macroeconomic variables, but Hibbs and Beck fail to incorporate theoretical constraints. Such constraints could help determine what kinds of outcomes are feasible and sustainable, and to what extent outcomes are induced by policies as opposed to shocks. Our purpose here is to consider how one might go about estimating party differences in a framework that takes advantage of some insights offered by macroeconomic theories, and to report some preliminary results. (A more complete description of the analysis is provided in our working paper, available upon request.)

The Memoranda of Discussion provide detailed records of Federal Open Market Committee (FOMC) meeting deliberations. Procedures are developed for coding the textual data in the Memoranda and assessing the reliability of those codings. The codings are then used in the estimation of parameters of individual FOMC members' reaction functions. Data from the 1970 to 1976 period are employed in the estimation. In the future, similar methods could be used to analyze newly released transcripts of FOMC meetings held after 1976.