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The fiscal model of American presidential elections, which borrows or adapts four of its six variables from Ray Fair’s eight-variable Presidential Vote Share Equation, is represented as follows:
VOTE2 = A + b1(GROWTH) + b2(ALLNEWS) + b3(DURATION) + b4(PARTY) + b5(FISCAL or FPRIME) + e
where
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VOTE2=incumbent share of the two-party presidential vote (adapted from Fair’s Vp, the “Democratic share of the two-party presidential vote")
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GROWTH (G in Fair’s equation)=“growth rate of real per capita GDP in the first three quarters of the [presidential] election year (annual rate)”
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ALLNEWS (z)= the “number of quarters in the first 15 quarters of the administration in which the growth rate of real per capita GDP is greater than 3.2,” except that Fair zeroes out this variable in 1920, 1944, and 1948, whereas in the fiscal model the actual values are entered
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DURATION (DUR)=0 if the incumbent party has been in the White House for one term, 1 if two terms, 1.25 if three, 1.5 if four, and so on
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PARTY=1 if the incumbent is a Democrat, -1 if a Republican
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FISCAL or FPRIME (explained below)=1 if expansionary or expansive and -1 if cutback or contractionary
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A is a constant (intercept)
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b1-b5 are coefficients
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e is an error term
The fifth predictor, the one that lends the model its name, measures the change in federal outlays/GDP, what we call "fiscal policy" ( Cuzán and Heggen 1984; Cuzán, Heggen and Bundrick 2009). As noted above, we have two metrics for fiscal policy, FISCAL and FPRIME. In most years, these variables take the same sign, but for reasons explained elsewhere (see Cuzán and Bundrick, 2008 and Cuzán and Bundrick, 2009), in 2008 they took opposite signs. In 2012, however, both are equal to 1. That is a given, as are PARTY (Democrat=1) and DURATION (first term=0).
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Written by Andreas Graefe
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Monday, 07 November 2011 09:55 |
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Alfred Cuzan provided Polly with an updated forecast of the fiscal model. The fiscal model is a variation of Ray Fair's model and includes a "fiscal policy" variable that measures the change in federal outlays / GDP. According to this model the incumbent loses support if fiscal policy is expansive or expansionary relative to the economy.
Plugging in the latest assumptions for the economic development that Fair used in his latest update and averaging the forecasts of the two variants of the model, the fiscal model predicts Obama to achieve 46.6% of the popular two-party vote. Click here to read the short note on this model update. |
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Written by Andreas Graefe
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Thursday, 08 September 2011 14:38 |
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Alfred Cuzan provided Polly with an updated forecast of the fiscal model. The fiscal model is a variation of Ray Fair's model and includes a "fiscal policy" variable that measures the change in federal outlays / GDP. According to this model the incumbent loses support if fiscal policy is expansive or expansionary relative to the economy. Plugging in the latest assumptions for the economic development that Fair used in his latest update, the fiscal model predicts Obama to achieve 49.9% of the popular two-party vote. In other words, the model currently predicts a virtual tie for 2012. Click here to read the short note on this model update.
The combined PollyVote forecast still sees Obama ahead, albeit at a decreasing margin. With today's forecast, Polly forecasts Obama to achieve 50.5% of the popular two-party vote. This is the lowest value for Obama since the launch of the PollyVote on January 1st. |
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