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Does Presidential Party Impact Inflation Estimates?

Post developed by Katie Brown and Cassandra Grafström.

113690314So-called “inflation truthers” have made recent news waves with claims that inflation is actually much higher than reported. Mainstream financial news organizations have debunked the inflation truthers charges with the simple math of averages. But what if the truthers are just looking in the wrong place? That is, is there systematic bias not in reported inflation but projected inflation?

Enter the work of Cassandra Grafström, a Ph.D. candidate in the Department of Political Science and affiliate of the Center for Political Studies (CPS) at the University of Michigan. Grafström, along with Christopher Gandrud of the Hertie School of Governance, conducted research to trace potential partisan biases of inflation estimates.

Grafström and Gandrud began with the widely accepted notion that under more liberal governments, the United States Federal Reserve tends to predict higher inflation. But why? Democratic administrations tend to try to lower unemployment, which causes higher inflation. Under more conservative governments, on the other hand, the Federal Reserve predicts lower inflation. Yet there exists little empirical support for these ideas. Instead, most work on inflation comes from the field of economics, with a focus on comparing Federal predictions with money market predictions.

To test these commonly held ideas, Grafström and Gandrud looked at the Federal Reserve’s predictions across time. The authors took Presidential party and actual monetary and fiscal policies into account. They found that, regardless of actual monetary and fiscal policies, under more liberal presidents, the Federal Reserve over-estimates inflation while under more conservative presidents, the Federal Reserve under-estimates inflation.

In the graph below, perfect predictions would create an error of 0. Points above the line correspond to over-estimation and points below the line correspond to under-estimation. As we can see, when a Democrat is president, estimate errors tend to be above the line, while the average of Republican errors falls below the line.

 Errors in Inflation Forecasts Across Time by Presidential Party

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Grafström and Gandrud also wondered if control of Congress plays a role. To test this, they considered the joint influence of presidential party and the majority party in Congress. As the graph below shows, presidential party drives the trend. Interestingly, a Republican controlled Congress makes the original results stronger. That is, with a Democratic president and Republican congress, there is greater over-estimation of inflation. Likewise, with a Republican president and Republican congress, there is greater under-estimation of inflation. The graph below illustrates these findings (0 would again represent a match between predicted and actual inflation)

Errors in Inflation Forecasts Across Time by Presidential and Congress Majority Parties

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Given the clear links between presidential partisanship and inflation forecasts, the authors worry that this likely translates into biased monetary and fiscal policies. That is, over-estimated inflation under Democratic presidents may lead to more restrictive monetary and fiscal policies. On the other hand, under-estimated inflation under Republican presidents may lead to more expansive monetary and fiscal policies. In both cases, the policy changes would be based on forecasts biased by flawed but accepted rules of thumb about inflation under Democrat vs. Republican presidents.

Q&A on Ukraine: Troop movements, sanctions, and Russia’s plans

Written by William Foreman for Global Michigan. Reblogged here with permission.

Pro-Russian militants in Eastern Ukraine. (Credit: VOA)

Pro-Russian militants in Eastern Ukraine. (Credit: VOA)

As the conflict grinds on in Ukraine, there are more questions about Russia’s intentions, the effectiveness of sanctions and what the West can do to end the fighting. These issues were discussed in a Global Michigan interview with Yuri Zhukov.

Zhukov is an assistant professor of political science at the University of Michigan and a faculty associate at the Center for Political Studies. His expertise is in international and civil conflicts.

Yuri Zhukov

Yuri Zhukov

The scholar has several projects ongoing on the fighting in East Ukraine. He’s interested in rebel movements in the region, the economics behind the conflict, military operations and the “information war” in the Russian and Ukrainian media. He recently wrote a piece for Foreign Affairs.

What is Russia up to now?

Zhukov: Last week, NATO accused Russia of sending tanks and artillery into Ukraine, and the Organization for Security and Co-operation in Europe reported seeing a column of unmarked military trucks heading toward Donetsk. Russia denies these claims, and accuses Ukraine of concentrating its own forces near the front line. In fact, both sides of the conflict have been steadily ratcheting up tensions since elections this fall, in government and separatist-controlled areas of Ukraine. The outcome in each election simply reinforced the status quo, but both sides may now feel they have a stronger mandate to take bold steps.

Are the reported troop movements into Ukraine part of a plan to create a land bridge with Crimea or annex more of the country?

Zhukov: These troop movements are not large enough to take significant territory outside rebel-held areas in Donetsk and Luhansk. They are more likely reinforcements for rebel units fighting in Donetsk airport and other contested areas and a deterrent against sudden moves by Ukraine.

Are the sanctions helping or hurting Russian President Vladimir Putin?

Zhukov: In the short term, the sanctions may have created a “rally-around-the-flag” effect, which boosts Putin’s domestic popularity. But historically, Putin has owed much of his popularity to perceptions of sound economic management. Russian consumers are seeing higher food prices, and the ruble has lost over a third of its value since the crisis began. Putin’s poll numbers are still high, but beginning to fall.

If the fighting escalates, should the U.S. and EU provide arms to Ukraine?

Zhukov: Some countries have already provided military aid, on a bilateral basis, most of it nonlethal. The larger question is whether Western military aid can actually change the military balance of power on the ground. Russia will surely see such a policy as a major provocation and will respond in kind. This could trigger an arms race along the lines we have seen in Syria, with increasing flows of weapons and fighters to both sides. This is also a commitment that the West would need to sustain for some time. Major military aid may deter rebels from taking more ground but is unlikely to reverse existing rebel gains in the near future.

Should there be more sanctions?

Zhukov: It depends. Some types of sanctions—like freezing the assets of wealthy Russians in Europe—actually align with Putin’s policy goal of “de-offshorization.” Anything that makes it more difficult for powerful Russians to park their money abroad is a win for Putin. Some of the new measures currently on the table—like blocking Russian banks and businesses from the SWIFT financial transaction system—will have bigger impact.

Sanctions can and are already hurting Russia’s economy. Whether they can also change the course of the Ukrainian conflict is a different matter. There is no “magic switch” that Putin can press to stop the fighting. The rebel high command has been replaced by a cadre of more professional, manageable leaders, but the rebellion as a whole is still a diverse, fractious lot. Many rival militias are looking to carve a place for themselves in the new “Peoples’ Republics,” and quite a few locals feel betrayed that Russia did not intervene more forcefully. Sanctions are unlikely to change the decision calculus of these actors.

What more can the West do?

Zhukov: The West has limited options, and many of them—like military aid, alliance commitments to Ukraine, even sanctions—are more likely to escalate the conflict than stop it. Russia has made clear that it is ready to intervene if the tide of the war turns decisively against the rebels—as it did, temporarily, in August this year. Any future steps—in Kyiv or the West—will take place against the background of this latent threat of force. What’s worse, the terms of the current ceasefire agreement are suboptimal for all parties. Rebel leaders want to eliminate pockets of government forces and create a more contiguous, governable territory. The Ukrainian president is under pressure from hard line elements in the government to take bolder action. The best course of action for the U.S. is to tread carefully, and do everything possible to restrain both sides.

 

What can statebuilding tell us about ISIL?

Post developed by Katie Brown and David A. Lake.

ISIL (a.k.a. ISIS, a.k.a. Da’ish) in Syria and Iraq. Al-Shabaab in Somalia. Boko Haram in Nigeria. Al-Qaeda in Pakistan and Afghanistan. All of these insurgent groups have risen to power in failed states, or “ungoverned spaces.” Can we fix these failed spaces?

DSC_0013David A. Lake, Distinguished Professor of Political Science at the University of California San Diego and Director of the Yankelovich Center for Social Science Research, addressed this question in a talk titled “The Statebuilder’s Dilemma: Legitimacy, Loyalty, and the Limits of External Intervention” at the annual Harold Jacobson Lecture in International Law which was held on October 23rd, 2014.

Statebuilding seeks to bring stability to unstable regions. Typically, an outside political power, e.g., the United States, will create a new government in a volatile region. In doing so, they attempt to bring a monopoly to legitimate violence. Usually this means supporting a political leader who can build a political coalition to overcome the conflicts. Often, the statebuilder marches in, plants a stake in the ground, and declares a new order. They guarantee this order as long as the different factions honor the new regime.

Statebuilding presents challenges. First, it is very expensive, with the bulk of the cost falling on the failed state. The key to success is balancing legitimacy and loyalty, which proves to be a delicate balance. That is, the new leader must remain loyal to the statebuilder but also seem legitimate to the local population. The more interest the statebuilder has in the region, the more they will require loyalty. Statebuilding fails when the new leader balks at the loyalty. Instead, money meant to be invested in building infrastructure is diverted into building his political coalition.

With the exception of Japan and Germany post-World War II, statebuilding tends to fail. The opening examples exemplify this. So Lake poses the important question: What can be done?

Lake facetiously suggests not engaging in statebuilding as the best solution. Recognizing abstention to be unlikely, he offers a few other guidelines. First, better strategy and implementation is needed, especially around election timing and monitoring. Second, an international coalition should monitor statebuilding and the process of transferring power completely to the new state.

What do Birthers have in common? (Besides believing Obama was born outside the U.S.)

Post developed by Katie Brown and Josh Pasek.

The Birther movement contends that Barack Obama was not born in the United States. Even after releasing Obama’s short form and long form birth certificates to the public, which should have settled the matter, the rumors to the contrary continued. Some contend Obama was born in Kenya. Others argue he forfeited American citizenship while living in Indonesia as a child.

What drives these beliefs?

Obama's Short-form Birth Certificate, courtesy of whitehouse.gov

Obama’s short form birth certificate, courtesy of whitehouse.gov

Center for Political Studies (CPS) Faculty Associate and Communication Studies Assistant Professor of  Josh Pasek – along with Tobias Stark, Jon Krosnick, and Trevor Tompson – investigated the issue.

The researchers analyzed data from a survey conducted by the Associated Press, GfK, Stanford University, and the University of Michigan. The survey asked participants where they believed Obama was born. The survey also asked about political ideology, party identification, approval of the President’s job, and attitudes toward Blacks.

21.7% of White Americans did not think Obama was born in the U.S.; their answers included “not in the U.S.,” “Thailand,” “the bush,” and, most frequently, “Kenya.”

Further analyses revealed that Republicans and conservatives were more likely to believe Obama was born abroad. Likewise, negative attitudes toward blacks also correlated with Birther endorsement. Importantly, disapproval of Obama mediated the connection between both ideology and racism on the one hand and Birther beliefs on the other.

The authors conclude that, “Individuals most motivated to disapprove of the president – due to partisanship, liberal/conservative self-identification, and attitudes toward Blacks – were the most likely to hold beliefs that he was not born in the United States.” Put simply, the key feature of Birthers wasn’t that they were Republicans or that they held anti-Black attitudes, but that they disapproved of the president. It was this disapproval that was most closely associated with the willingness to believe that President Obama was ineligible for his office.

The full Electoral Studies article can be found here.

How the 2014 Israel-Gaza Conflict Changed Palestinian Views 

Post developed by Katie Brown in coordination with Khalil Shikaki and Mark Tessler.

Photo credit: ThinkStock

Photo credit: ThinkStock

This summer witnessed intense fighting between Israel and Gaza. With tens of thousands of rockets fired, the conflict killed more than 2,000 Palestinians, mostly civilians, and 80 Israelis, mostly soldiers. How has the most recent conflict affected Palestinian attitudes?

The Palestinian Center for Policy and Research (PCPSR) conducted a survey to gauge this impact. PCPSR is run by Khalil Shikaki. This year, Shikaki is a visiting scholar at the Center for Political Studies (CPS), working closely with CPS Research Professor and expert on the Middle East Mark Tessler. In this post, we offer results from PCPSR’s study along with insight from Tessler to understand the impact of the conflict on Palestinian public opinion.

PCPSR surveyed 1,270 adults in 127 locations across the West Bank and Gaza Strip between August 26 and August 30, 2014, coinciding with the first lasting ceasefire of the conflict. Results suggest that a significant majority (79%) of the Palestinian public views Hamas as the conflict’s winner. Just 3% believe Israel emerged victorious, while 17% believe both sides lost. Likewise, 79% blame Israel for starting this wave of fighting, while 86% support launching rockets at Israel from Gaza when under attack. As for the ceasefire agreement: 63% think it satisfies Palestinian interests.

Photo credit: ThinkStock

Photo credit: ThinkStock

In addition to these conflict-specific findings, the PCPSR study also finds increasing support for Hamas among Palestinians to levels not seen since 2006. If elections occurred today, current Hamas deputy political bureau chief Ismail Haniyeh would easily win a presidential race against current president Mahoud Abbas. This is a massive shift in public opinion. Tessler notes that before the most recent conflict, support for Hamas was fading. Shikaki attributes this gain to the conflict, while predicting the Hamas support may wane as time passes. Tessler likewise cautions, “If things do settle down for a reasonable period and there is a new and stable status quo, any spike in Hamas popularity will probably drift back toward its ‘normal’ level based on what people favor and perceive with respect to political Islam, compromise with Israel, corruption and other issues that drive Palestinian politics in normal times.” Thus, the lingering effects of the 2014 Israel-Gaza conflict will depend on whether or not the ceasefire continues.

Khalil Shikaki will give a talk at the CPS Interdisciplinary Workshop on Politics and Policy on September 17, 2014 in Room 6006 of the Institute for Social Research in Ann Arbor, Michigan.

 

 

Securing Digital Infrastructures for Democracies “Born Digital” – How States and Activists are Competing to Regulate the Political Internet

Post developed by Katie Brown and Muzammil M. Hussain.

ICYMI (In Case You Missed It), the following work was presented at the 2014 Annual Meeting of the American Political Science Association (APSA).  The presentation, titled “Post-Arab Spring Formations of the Internet Freedom Regime,” was a part of the Political Communication panel “From the Middle East to the Million Man March: The Continuing Digital Revolution” on Saturday August 30th, 2014.

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Photo credit: ThinkStock

In early 2011 through 2012, unexpected uprisings cascaded throughout the Arab World. News of this Arab Spring swept across the globe, which inspired several other cascades of political change. Communication systems, especially social media networks, offered an immediate and intimate glimpse into these movements, their successes and failures. So how have state powers and political activists responded to the political capacities of this shared and global digital infrastructure?

Communication Studies Assistant Professor and Center for Political Studies (CPS) Faculty Associate Muzammil M. Hussain studies the political economy of Internet freedom activism. In particular, he is interested in the fate of digital infrastructure in “born digital” states, or states which had successful regime changes that were enabled by digital media. The Arab Spring presents a fascinating and recent moment to consider these “born digital” states. Hussain asks what role governments – both the challenged authoritarian states and the emerging democracies – are playing in shaping communication networks. To address this, he focuses on the transnational activities of political activists promoting Internet freedom.

Hussain conducted fieldwork in the Middle East, North Africa, Western Europe, and North America between 2012-2013, after the Arab Spring protests subsided and a new kind of policy activism took root. Through this international network ethnography of policy makers, communications corporations, and political activists involved in the Arab Spring, Hussain collected a massive array of data. The data includes both interviews and participant-observation, with corroborative evidence of 5,000 individuals and their 84,000 social ties, as well as over 2,000 emails generated through their lobbying and activism work.

This meta-database encompasses the three main stakeholders in Internet freedom promotion: state powers, technology providers, and civil society actors. Hussain argues that Western democracies have been important and successful in launching several major initiatives for securing internet freedom and supporting digital activists currently working within repressive political systems. But these efforts to establish an Internet freedom policy regime are currently gridlocked in competing “communities of practice.”

On the one hand, the community of state-based stakeholders have come to narrowly regard digital media as a critical infrastructure, overvalued its significance as an economic interest and undervalued its significance to democratic activists. On the other hand, since the Arab Spring, the community of tech-savvy political activists has moved rapidly into many new communications policy arenas. Finally, revelations of warrantless surveillance by several advanced democracies have also threatened the viability of this Internet freedom regime. So what are democratic activists and Internet freedom promoters left to do? Stay tuned for Hussain’s next book project: Securing Technologies of Freedom: Internet Freedom Promotion after the Arab Spring.

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