Publication type: Article in scientific journal
Type of review: Peer review (publication)
Title: Partisan bias in inflation expectations
Authors: Bachmann, Oliver
Gründler, Klaus
Potrafke, Niklas
Seiberlich, Ruben
et. al: No
DOI: 10.1007/s11127-019-00741-0
Published in: Public Choice
Issue Date: 25-Oct-2019
Publisher / Ed. Institution: Springer
ISSN: 0048-5829
Language: English
Subjects: Inflation expectation; Partisan bias; Political ideology; Voters’ perception
Subject (DDC): 332: Financial economics
Abstract: We examine partisan bias in inflation expectations. Our dataset includes inflation expectations of the New York Fed’s Survey of Consumer Expectations over the period June 2013 to June 2018. The results show that inflation expectations were 0.46% points higher in Republican-dominated than in Democratic-dominated US states when Barack Obama was US president. Compared to inflation expectations in Democratic-dominated states, inflation expectations in Republican-dominated states declined by 0.73% points when Donald Trump became president. We employ the Blinder–Oaxaca decomposition method to disentangle the extent to which political ideology and other individual characteristics predict inflation expectations: around 25% of the total difference between inflation expectations in Democratic-dominated versus Republican-dominated states is based on how partisans respond to changes in the White House’s occupant (partisan bias). The results also corroborate the belief that voters’ misperceptions of economic conditions decline when the president belongs to the party that voters support.
Fulltext version: Published version
License (according to publishing contract): Licence according to publishing contract
Departement: School of Management and Law
Appears in collections:Publikationen School of Management and Law

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