We get an insight by looking at how a German minister of finance, trained as an economist, handled his dual role as a politician (at an election rally in the evening) and as an economist (in his office the next day). So if you are a politician worrying about your citizens’ concerns as well as your own career, you should minimize both unemployment and inflation. FRED Electoral results: US National Archives. Economic Policy 16 (32) (April): pp. 52–82 CPI after 1950: Federal Reserve Bank of St. ‘Is the crisis problem growing more severe?’. Inflation before 1950: Michael Bordo, Barry Eichengreen, Daniela Klingebiel, and Maria Soledad Martinez-Peria. ![]() The R-squared is 0.43 compared to 0.30, and the coefficient on inflation is still negative and significant. If the two observations in which deflation (falling prices) occurred are included in the regression in absolute values-reflecting the fact that it is changes in prices that are unpopular-then the relationship shown in the figure is stronger. Note: In the chart, two years in which deflation occurred have been omitted. Figure 15.1 shows that in US presidential elections, the margin of victory of the ruling party is higher when inflation is lower. In Unit 13 we saw that unemployment undermines our wellbeing, but inflation worries us too. Two important measures of this economic performance are unemployment and inflation. In a democracy, election outcomes are always affected by the state of the economy, and how the public judges the economic competence of the government and the opposition. When the ballots were counted in November 1992, Clinton received almost 6 million more votes than George H. W. Bush, the incumbent president. The 1991 recession meant that many Americans lost their jobs, and the Clinton campaign slogan brought this issue to the attention of the voters. The reason was the phrase the campaign workers used: ‘The economy, stupid!’ But it was the third focus of his campaign-the recession of 1991-that resonated with the public.
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