Party Polarization and the Business Cycle in the United States

A large literature has studied the trend of greaterpolarization between Democrats and Republicans in Congress.This paper empirically examines the extent to which inflationand unemployment explain cyclical movements ofpolarization over time. An informal application of thestandard Downsian spatial competition model of partiesgenerates the following relationships, ceteris paribus: (1)inflation should be associated with policy convergence, (2)unemployment should be associated with polarization, (3) theeffect of unemployment on polarization should be larger inmagnitude than the effect of inflation on convergence, and (4)the effect of unemployment on polarization should be strongerin the House than in the Senate. We estimate the relationshipbetween vote records and business cycle conditions over the1947–1999 period using a GLS model with varying lags. Ourresults are broadly consistent with these business cyclehypotheses of polarization, though greater support is found inHouse data than in Senate data. Copyright Kluwer Academic Publishers 2004