1. Political Party & Unemployment Group 5: Richard Baker, Michael Jelmini, Kenneth Morino, Cambria Price, You Ren, James Young Econ 240A Professor Llad Phillips

2. Objective  Why? Upcoming graduation Recent recession Recent increase in unemployment  What? Is there a correlation between unemployment and presidential party affiliation?  How? Time series data of national unemployment rate Bernoulli distribution of party affiliation

3. Hypothesis H 0 : When a republican is in presidential office, the unemployment rate is higher than when a democrat is in office. H a : There is no correlation between the political affiliation of the president and the unemployment rate.

4. Collected Data Unemployment Data from 1947-2002 - Bureau of Labor Statistics http://stats.bls.gov Presidential Party Affiliations - The White House http://www.whitehouse.gov/history/presidents

5. Meet the Presidents

6. Presidential Party Affiliation

7. Time Series Data of Unemployment Rates

9. Linear Probability Model

10. Regression Results

11. Linear Probability Model Analysis Problem: –LPM not constrained within 0<P(x)<1 Solution: – model with Probit!

12. Model with Probit

13. Probit Regression Results

14. Further Analysis Is there an unemployment rate overlap due to previous presidential party affiliation? If so, how much overlap? –1 year –2 years Will these models produce a better/worse correlation?

15. One Year Forward Lag BeforeAfter

16. Probit Model of One Year Lag

17. One Year Lag Results

18. Two Year Forward Lag BeforeAfter

19. Probit Model of Two Year Lag

20. Two Year Lag Results

21. Conclusions A significant correlation between unemployment rate and political party affiliation was discovered A stronger correlation was found when applying a one year lag, and to a lesser degree, a two year lag, on this relationship Overall, we conclude from our data that unemployment is significantly greater when a Republican president is in office when compared to a Democrat