Government ideology and economic policy-making in the United States-a survey

This paper describes the influence of government ideology on economic policy-making in the United States. I review studies using data for the national, state and local levels and elaborate on checks and balances, especially divided government, measurement of government ideology and empirical strategies to identify causal effects. Many studies conclude that parties do matter in the United States. Democratic presidents generate, for example, higher rates of economic growth than Republican presidents, but these studies using data for the national level do not identify causal effects. Ideology-induced policies are prevalent at the state level: Democratic governors implement somewhat more expansionary and liberal policies than Republican governors. At the local level, government ideology hardly influences economic policy-making at all. How growing political polarization and demographic change will influence the effects of government ideology on economic policy-making will be an important issue for future research.