Is There a Difference?

How Should You Vote? Is “Big Government” better?Is “Big Government” better? –Republicans want less government involvement. –Democrats want more government involvement. Which party’s strategy is better?Which party’s strategy is better? –Is there a positive correlation between GDP and government expenditures? AnalysisAnalysis –Find change in GDP and government expenditures for each president’s term. –Determine if there is a correlation between the political party and the health of the economy.

Initial Hypothesis Voting for Democratic candidates would be better for our economy in terms of GDP growth.Voting for Democratic candidates would be better for our economy in terms of GDP growth. –During President Clinton’s stay in office, the economy prospered. –During President Bush’s term, the economy has not maintained the growth that it had during Clinton’s term.

The Numbers GDP per year since Government expenditures per year since Party affiliation of presidents since Party affiliation of senators and house representatives since 1948.

Regression Output Our regression does not fit the actual data perfectly… Our regression does not fit the actual data perfectly… However, it does model it quite well. However, it does model it quite well.

Government Expenditures Government expenditures were rising from 1948 till Government expenditures were rising from 1948 till Government expenditures have been declining since Government expenditures have been declining since 1992.

GDP per Worker GDP per worker used because it factors out population increases over time. GDP per worker used because it factors out population increases over time. GDP per worker more accurate measure of economy’s strength. GDP per worker more accurate measure of economy’s strength.

Party Affiliation of the Government Party affiliations tells us the majority party of the “main decision makers”. Party affiliations tells us the majority party of the “main decision makers”. Democrats are the majority party in 25 of the 30 years being observed. Democrats are the majority party in 25 of the 30 years being observed.

10 Year Forecast of GDP Trend in Government Expenditures since Trend in Government Expenditures since Downward sloping and turns negative around Downward sloping and turns negative around 1988.

10 Year Forecast cont… Orange trend line represents 10-year forecast of GDP per Worker. Orange trend line represents 10-year forecast of GDP per Worker. Assumes that government expenditures continued its downward trend. Assumes that government expenditures continued its downward trend.

Final Hypothesis We found that the party affiliation of the Presidents and the political representatives in Congress are not significantly correlated with the change in GDP per worker.We found that the party affiliation of the Presidents and the political representatives in Congress are not significantly correlated with the change in GDP per worker. However, the change in government share is significantly correlated with the change in GDP per worker.However, the change in government share is significantly correlated with the change in GDP per worker.

GDP vs. Government Expenditures Dependent Variable: GDP variable Method: Least Squares Date: 11/23/03 Time: 15:37 Sample(adjusted): 2 51 Included observations: 50 after adjusting endpoints VariableCoefficientStd. Errort-StatisticProb. C Gov’s Share(-1) Political Dummy 1.03E R-squared Mean dependent var Adjusted R-squared S.D. dependent var S.E. of regression Akaike info criterion Sum squared resid Schwarz criterion Log likelihood F-statistic Durbin-Watson stat Prob(F-statistic)

Questions?

Questions?