Incumbency Disadvantage of Political Parties: The Role of Policy Inertia and Prospective Voting

64 Pages Posted: 28 Jan 2019 Last revised: 21 Feb 2019

See all articles by Satyajit Chatterjee

Satyajit Chatterjee

Federal Reserve Bank of Philadelphia

Burcu Eyigungor

Federal Reserve Bank of Philadelphia

Date Written: 2019-01-24

Abstract

We document that postwar U.S. elections show a strong pattern of “incumbency disadvantage": If a party has held the presidency of the country or the governorship of a state for some time, that party tends to lose popularity in the subsequent election. To explain this fact, we employ Alesina and Tabellini's (1990) model of partisan politics, extended to have elections with prospective voting. We show that inertia in policies, combined with sufficient uncertainty in election outcomes, implies incumbency disadvantage. We find that inertia can cause parties to target policies that are more extreme than the policies they would support in the absence of inertia and that such extremism can be welfare reducing.

Keywords: rational partisan model, incumbency disadvantage, policy inertia, prospective voting, median voter

JEL Classification: D72, H50

Suggested Citation

Chatterjee, Satyajit and Eyigungor, Burcu, Incumbency Disadvantage of Political Parties: The Role of Policy Inertia and Prospective Voting (2019-01-24). FRB of Philadelphia Working Paper No. 19-7. Available at SSRN: https://ssrn.com/abstract=3323249 or http://dx.doi.org/10.21799/frbp.wp.2019.07

Satyajit Chatterjee (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States
215-574-3861 (Phone)
215-574-4364 (Fax)

HOME PAGE: http://sites.google.com/site/chatterjeesatyajit/home

Burcu Eyigungor

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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