IDEAS home Printed from https://ideas.repec.org/a/eee/moneco/v116y2020icp298-333.html
   My bibliography  Save this article

Economic leadership and growth

Author

Listed:
  • Brown, Craig O.

Abstract

Economies governed by former economics students grow faster than economies governed by leaders with other education backgrounds; a result which is most evident for presidents. Faster growth (average growth) occurs during an economic leader's first year (entire tenure), primarily through investment. When focusing on close elections which “quasi-randomize” economic leadership, I find a large effect that is robust controlling for a leader's advanced education. Investors seem to hasten their activity in anticipation of their economic leader's eventual reduction of the top personal income-tax rate. Overall, the findings suggest that economic leaders improve short-term growth through the anticipation of policy changes.

Suggested Citation

  • Brown, Craig O., 2020. "Economic leadership and growth," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 298-333.
    • Handle: RePEc:eee:moneco:v:116:y:2020:i:c:p:298-333
    DOI: 10.1016/j.jmoneco.2019.11.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304393219302028
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jmoneco.2019.11.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 1-27, May.
    2. Anton Braun, R., 1994. "Tax disturbances and real economic activity in the postwar United States," Journal of Monetary Economics, Elsevier, vol. 33(3), pages 441-462, June.
    3. Giavazzi, Francesco & Tabellini, Guido, 2005. "Economic and political liberalizations," Journal of Monetary Economics, Elsevier, vol. 52(7), pages 1297-1330, October.
    4. Fair, Ray C, 1978. "The Effect of Economic Events on Votes for President," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 159-173, May.
    5. Joshua D. Angrist & Jörn-Steffen Pischke, 2010. "The Credibility Revolution in Empirical Economics: How Better Research Design Is Taking the Con out of Econometrics," Journal of Economic Perspectives, American Economic Association, vol. 24(2), pages 3-30, Spring.
    6. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
    7. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 407-443.
    8. Christiano, Lawrence J & Eichenbaum, Martin, 1992. "Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations," American Economic Review, American Economic Association, vol. 82(3), pages 430-450, June.
    9. Torsten Persson & Guido Tabellini, 2009. "Democratic Capital: The Nexus of Political and Economic Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(2), pages 88-126, July.
    10. repec:hal:spmain:info:hdl:2441/67ft27s7u58ocangahl1jigu6p is not listed on IDEAS
    11. Dreher, Axel & Lamla, Michael J. & Lein, Sarah M. & Somogyi, Frank, 2009. "The impact of political leaders' profession and education on reforms," Journal of Comparative Economics, Elsevier, vol. 37(1), pages 169-193, March.
    12. Shleifer, Andrei, 1997. "Government in transition," European Economic Review, Elsevier, vol. 41(3-5), pages 385-410, April.
    13. Johnson, Simon & Larson, William & Papageorgiou, Chris & Subramanian, Arvind, 2013. "Is newer better? Penn World Table Revisions and their impact on growth estimates," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 255-274.
    14. Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 47-100.
    15. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-475, March.
    16. Marion Fourcade & Etienne Ollion & Yann Algan, 2015. "The Superiority of Economists," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 89-114, Winter.
    17. Benjamin F. Jones & Benjamin A. Olken, 2005. "Do Leaders Matter? National Leadership and Growth Since World War II," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 835-864.
    18. McGrattan, Ellen R., 1994. "The macroeconomic effects of distortionary taxation," Journal of Monetary Economics, Elsevier, vol. 33(3), pages 573-601, June.
    19. Peter Blair Henry & Conrad Miller, 2009. "Institutions versus Policies: A Tale of Two Islands," American Economic Review, American Economic Association, vol. 99(2), pages 261-267, May.
    20. Brender, Adi & Drazen, Allan, 2013. "Elections, leaders, and the composition of government spending," Journal of Public Economics, Elsevier, vol. 97(C), pages 18-31.
    21. Robert J. Blendon, 1997. "Bridging the Gap between the Public's and Economists' Views of the Economy," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 105-118, Summer.
    22. Karel Mertens & Morten O. Ravn, 2013. "The Dynamic Effects of Personal and Corporate Income Tax Changes in the United States," American Economic Review, American Economic Association, vol. 103(4), pages 1212-1247, June.
    23. Sergio Rebelo, 2005. "Real Business Cycle Models: Past, Present and Future," RCER Working Papers 522, University of Rochester - Center for Economic Research (RCER).
    24. Alan J. Auerbach & Yuriy Gorodnichenko, 2017. "Fiscal Stimulus and Fiscal Sustainability," NBER Working Papers 23789, National Bureau of Economic Research, Inc.
    25. Eric M. Leeper & Todd B. Walker & Shu‐Chun Susan Yang, 2013. "Fiscal Foresight and Information Flows," Econometrica, Econometric Society, vol. 81(3), pages 1115-1145, May.
    26. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    27. Rodney J. Andrews & Scott A. Imberman & Michael F. Lovenheim, 2017. "Risky Business? The Effect of Majoring in Business on Earnings and Educational Attainment," NBER Working Papers 23575, National Bureau of Economic Research, Inc.
    28. J. Bradford De Long & Lawrence H. Summers, 1991. "Equipment Investment and Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 445-502.
    29. Kerwin Kofi Charles & Erik Hurst & Matthew J. Notowidigdo, 2018. "Housing Booms and Busts, Labor Market Opportunities, and College Attendance," American Economic Review, American Economic Association, vol. 108(10), pages 2947-2994, October.
    30. Marion Fourcade & Etienne Ollion & Yann Algan, 2015. "The Superiority of Economists," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 89-114, Winter.
    31. Christine Fauvelle-Aymar & Abel François, 2006. "The impact of closeness on turnout: An empirical relation based on a study of a two-round ballot," Public Choice, Springer, vol. 127(3), pages 461-483, June.
    32. David Figlio & Paola Giuliano & Umut Özek & Paola Sapienza, 2019. "Long-Term Orientation and Educational Performance," American Economic Journal: Economic Policy, American Economic Association, vol. 11(4), pages 272-309, November.
    33. Andrew C. Eggers & Anthony Fowler & Jens Hainmueller & Andrew B. Hall & James M. Snyder, 2015. "On the Validity of the Regression Discontinuity Design for Estimating Electoral Effects: New Evidence from Over 40,000 Close Races," American Journal of Political Science, John Wiley & Sons, vol. 59(1), pages 259-274, January.
    34. Daniel Treisman, 2015. "Income, Democracy, and Leader Turnover," American Journal of Political Science, John Wiley & Sons, vol. 59(4), pages 927-942, October.
    35. Matthew D. Shapiro & Christopher L. House, 2006. "Phased-In Tax Cuts and Economic Activity," American Economic Review, American Economic Association, vol. 96(5), pages 1835-1849, December.
    36. David S. Lee & Enrico Moretti & Matthew J. Butler, 2004. "Do Voters Affect or Elect Policies? Evidence from the U. S. House," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 807-859.
    37. Trevon D. Logan, 2018. "Do Black Politicians Matter?," NBER Working Papers 24190, National Bureau of Economic Research, Inc.
    38. Marion Fourcade & Etienne Ollion & Yann Algan, 2015. "La superioridad de los economistas," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 17(33), pages 13-43, July-Dece.
    39. Slemrod, Joel, 2004. "Are corporate tax rates, or countries, converging?," Journal of Public Economics, Elsevier, vol. 88(6), pages 1169-1186, June.
    40. David Brady & Michael Spence, 2010. "Leadership and Growth : Commission on Growth and Development," World Bank Publications - Books, The World Bank Group, number 2404.
    41. Anusha Chari & Peter Blair Henry & Racha Moussa, 2017. "Does Capital Scarcity Matter?," NBER Working Papers 23921, National Bureau of Economic Research, Inc.
    42. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
    43. Roland Hodler & Paul A. Raschky, 2014. "Regional Favoritism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(2), pages 995-1033.
    44. Farmer Roger E. A. & Guo Jang-Ting, 1994. "Real Business Cycles and the Animal Spirits Hypothesis," Journal of Economic Theory, Elsevier, vol. 63(1), pages 42-72, June.
    45. Robst, John, 2007. "Education and job match: The relatedness of college major and work," Economics of Education Review, Elsevier, vol. 26(4), pages 397-407, August.
    46. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oscar Calvo-Gonz'alez & Axel Eizmendi & Germ'an Reyes, 2022. "The Shifting Attention of Political Leaders: Evidence from Two Centuries of Presidential Speeches," Papers 2209.00540, arXiv.org, revised Jun 2023.
    2. Philipp Hauber & Stormy-Annika Mildner & Galina Kolev & Jürgen Matthes & Sonja Peterson & Reimund Schwarze & Christiane Lemke & Martin, Thunert & Laura von Daniels & Josef Braml & Johannes Varwick & D, 2021. "Die USA unter Joe Biden: Kehrtwende oder "America first light"?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(01), pages 03-37, January.
    3. Dorine Boumans & Klaus Gründler & Niklas Potrafke & Fabian Ruthardt, 2021. "The Global Economic Impact of Politicians: Evidence from an International Survey RCT," EconPol Working Paper 56, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    4. Boumans, Dorine & Gründler, Klaus & Potrafke, Niklas & Ruthardt, Fabian, 2024. "Political leaders and macroeconomic expectations: Evidence from a global survey experiment," Journal of Public Economics, Elsevier, vol. 235(C).
    5. Peveri, Julieta, 2022. "The wise, the politician, and the strongman: Types of national leaders and quality of governance," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 849-895.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ramey, V.A., 2016. "Macroeconomic Shocks and Their Propagation," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 71-162, Elsevier.
    2. Fotiou, Alexandra & Shen, Wenyi & Yang, Shu-Chun S., 2020. "The fiscal state-dependent effects of capital income tax cuts," Journal of Economic Dynamics and Control, Elsevier, vol. 117(C).
    3. Méon, Pierre-Guillaume & Sekkat, Khalid, 2022. "A time to throw stones, a time to reap: how long does it take for democratic transitions to improve institutional outcomes?," Journal of Institutional Economics, Cambridge University Press, vol. 18(3), pages 429-443, June.
    4. Sims, Eric & Wolff, Jonathan, 2018. "The state-dependent effects of tax shocks," European Economic Review, Elsevier, vol. 107(C), pages 57-85.
    5. Aleksey Oshchepkov & Anna Shirokanova, 2020. "Multilevel Modeling For Economists: Why, When And How," HSE Working papers WP BRP 233/EC/2020, National Research University Higher School of Economics.
    6. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2023. "Populist Leaders and the Economy," American Economic Review, American Economic Association, vol. 113(12), pages 3249-3288, December.
    7. Farmer, Roger E. A. & Jang-Ting, Guo, 1995. "The econometrics of indeterminacy: an applied study," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 43(1), pages 225-271, December.
    8. Valerie A. Ramey, 2019. "Ten Years after the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 89-114, Spring.
    9. Torsten Persson & Guido Tabellini, 2007. "The growth effect of democracy: Is it heterogenous and how can it be estimated?," Working Papers 322, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    10. Efrem Castelnuovo & Guay Lim, 2019. "What Do We Know About the Macroeconomic Effects of Fiscal Policy? A Brief Survey of the Literature on Fiscal Multipliers," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 52(1), pages 78-93, March.
    11. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    12. John Gibson & Susan Olivia & Geua Boe‐Gibson, 2020. "Night Lights In Economics: Sources And Uses," Journal of Economic Surveys, Wiley Blackwell, vol. 34(5), pages 955-980, December.
    13. François, Abel & Méon, Pierre-Guillaume, 2021. "Politicians at higher levels of government are perceived as more corrupt," European Journal of Political Economy, Elsevier, vol. 67(C).
    14. Hibrahim Limi Kouotou & Boniface Ngah Epo, 2022. "Duration of heads of state in power and economic growth: a Sub-Saharan African tale," Economics Bulletin, AccessEcon, vol. 42(2), pages 1153-1170.
    15. Jong-A-Pin, Richard & Mierau, Jochen O., 2022. "No country for old men: Aging dictators and economic growth," Economic Modelling, Elsevier, vol. 107(C).
    16. Madsen, Jakob B. & Raschky, Paul A. & Skali, Ahmed, 2015. "Does democracy drive income in the world, 1500–2000?," European Economic Review, Elsevier, vol. 78(C), pages 175-195.
    17. John Gibson, 2021. "The micro‐geography of academic research: How distinctive is economics?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(4), pages 467-484, September.
    18. Ingrid Harvold Kvangraven & Surbhi Kesar, 2021. "Standing in the Way of Rigor? Economics’ Meeting with the Decolonizing Agenda," Working Papers 2110, New School for Social Research, Department of Economics.
    19. Quoc-Anh Do & Yen-Teik Lee & Bang Dang Nguyen, 2016. "Directors as Connectors: The Impact of the External Networks of Directors on Firms," Working Papers hal-03393196, HAL.
    20. Michel Serafinelli & Guido Tabellini, 2022. "Creativity over time and space," Journal of Economic Growth, Springer, vol. 27(1), pages 1-43, March.

    More about this item

    Keywords

    Government leadership; Economics education; Economic growth; Policy anticipation; Government finance; Tax cuts;
    All these keywords.

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:moneco:v:116:y:2020:i:c:p:298-333. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505566 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.