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Federal Reserve Bank of Philadelphia
Working Papers
Incumbency Disadvantage of Political Parties: The Role of Policy Inertia and Prospective Voting
Satyajit Chatterjee
Burcu Eyigungor
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.


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Satyajit Chatterjee & Burcu Eyigungor, Incumbency Disadvantage of Political Parties: The Role of Policy Inertia and Prospective Voting, Federal Reserve Bank of Philadelphia, Working Papers 19-7, 24 Jan 2019.
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Keywords: rational partisan model; incumbency disadvantage; policy inertia; prospective voting; median voter
DOI: 10.21799/frbp.wp.2019.07
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