Working Paper

Policy Inertia, Election Uncertainty and Incumbency Disadvantage of Political Parties

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. We show that this fact can be explained by a combination of policy inertia and unpredictability in election outcomes. A quantitative analysis shows that the observed magnitude of incumbency disadvantage can arise in several di?erent models of policy inertia. Normative and positive implications of policy inertia leading to incumbency disadvantage are explored.

Keywords: rational partisan model; policy inertia; incumbency disadvantage; election uncertainty; prospective voting;

JEL Classification: D72; H50;

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Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2019-10-24

Number: 19-40

Pages: 57 pages