Modeling Macro-Political Dynamics

Analyzing macro-political processes is complicated by four interrelated problems: model scale, endogeneity, persistence, and specification uncertainty. These problems are endemic in the study of political economy, public opinion, international relations, and other kinds of macro-political research....

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Bibliographic Details
Published in:Political analysis 2009, Vol.17 (2), p.113-142
Main Authors: Brandt, Patrick T., Freeman, John R.
Format: Article
Language:English
Subjects:
Bayesian analysis
Coefficients
Economic models
Economics
Fiscal policy
Macroeconomic modeling
Macroeconomics
Modeling
Monetary Policy
Parametric models
Political economy
Political science
Politics
Research Methodology
Unemployment
United States of America
Vector autoregression
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Summary:Analyzing macro-political processes is complicated by four interrelated problems: model scale, endogeneity, persistence, and specification uncertainty. These problems are endemic in the study of political economy, public opinion, international relations, and other kinds of macro-political research. We show how a Bayesian structural time series approach addresses them. Our illustration is a structurally identified, nine-equation model of the U.S. political-economic system. It combines key features of the model of Erikson, MacKuen, and Stimson (2002) of the American macropolity with those of a leading macroeconomic model of the United States (Sims and Zha, 1998; Leeper, Sims, and Zha, 1996). This Bayesian structural model, with a loosely informed prior, yields the best performance in terms of model fit and dynamics. This model 1) confirms existing results about the countercyclical nature of monetary policy (Williams 1990); 2) reveals informational sources of approval dynamics: innovations in information variables affect consumer sentiment and approval and the impacts on consumer sentiment feed-forward into subsequent approval changes; 3) finds that the real economy does not have any major impacts on key macropolity variables; and 4) concludes, contrary to Erikson, MacKuen, and Stimson (2002), that macropartisanship does not depend on the evolution of the real economy in the short or medium term and only very weakly on informational variables in the long term.
ISSN:1047-1987
1476-4989
DOI:10.1093/pan/mpp001