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10.7 The Hibbs Partisan Model

In the Nordhaus model there is policy convergence in that all governments

behave in the same opportunistic way, and all voters are assumed to have

identical preferences over inflation and unemployment. An alternative approach

is to view voters and politicians as ideological or partisan. Politicians

view winning elections as a means of putting into action their partisan programme

and heterogeneous voters will clearly have different preferences

over inflation and unemployment. Hibbs (1977) examined the post-war patterns

of economic policies and outcomes in 12 advanced capitalist democracies

for the period 1945–69 in order to test the proposition that left- and rightwing

governments have different preferences with respect to the trade-off

between inflation and unemployment. In particular, Hibbs argues that his

evidence supports the proposition that left-wing governments prefer a lower

U, higher ˙P outcome than right-wing governments. We can represent this

difference in preferences in terms of differences in loss functions. Equations

(10.8) and (10.9) show the loss (cost) functions in terms of unemployment

and inflation for two parties, a right-wing party = CR, and a left-wing party =

CL (see Alesina, 1987).






= − + t − R ( )2 ( ˙ ˙ )2

2 2

φ (10.8)






= − + t − L ( )2 ( ˙ ˙ )2

2 2

φ (10.9)

Here UR * and P˙R* are the unemployment and inflation targets of the right

wing party and φR is the relative weight placed on deviations of inflation

from target (P˙t − P˙R* ) relative to deviations of unemployment from target

(UR – UR * ). The partisan differences can be summed up as follows.


P˙ P˙ L R

φL ≤ φR

Partisan effects are further illustrated in Figure 10.5, where RR and LL indicate

the respective preferences of right- and left-wing politicians. Given the assumption

of a stable exploitable Phillips curve trade-off, left-wing governments

will choose a combination of ˙PL and UL, indicated by point L*, and right-wing

governments will choose a combination of ˙PR and UR, indicated by point R*.

Figure 10.5 The Hibbs partisan model

According to Hibbs, ‘different unemployment/inflation outcomes have important

class-linked effects on the distribution of national income’. The revealed

preference of policy makers reflects the interests of the social groups who

typically provide support for different parties. Since macroeconomic policies

have distributional consequences, Hibbs rejects Nordhaus’s assumption (N1) of

policy convergence. According to Hibbs, the empirical evidence supports the

partisan view that ‘a relatively low unemployment–high inflation macroeconomic

configuration is associated with substantial relative and absolute

improvements in the economic well-being of the poor’. Because tight labour

markets tend to generate income-equalizing effects, we should expect left-wing

governments to favour a point on the Phillips curve trade-off indicated by L*.

Right-wing parties view inflation as more damaging to their constituency of

upper middle-class voters and choose a position such as R*.

According to Hibbs, the empirical evidence supports the ideological view

of macroeconomic policy making. The differing interests of various occupational

groups is reflected in the policy preferences of left- and right-wing

political parties. In an examination of 12 Western European and North American

countries over the period 1945–69 Hibbs found strong support for the

proposition that the mean inflation rate is higher and the mean unemployment

rate lower, the greater the percentage of years that labour/socialist parties

have been in office. In addition to the static aggregated evidence, Hibbs also

found that the time series evidence for the USA and the UK supports the

proposition that Democratic and Labour administrations have usually reduced

unemployment while Republican and Conservative governments have

tended to increase unemployment. Hibbs (1987) also reports significant partisan

effects on the distribution of income and Bartels and Brady (2003)

conclude that the ‘consistent partisan differences in economic performance

identified by Hibbs remain alive and well two decades later’ and partisan

influences have had a ‘profound influence on the workings of the US economy’.

These influences are summarized in Table 10.2.

Table 10.2 Partisan influence on macroeconomic outcomes, USA, 1948–


Macroeconomic outcomes Republican Democratic Partisan

presidents presidents difference

Average unemployment (%) 6.35 4.84 1.51

Average inflation (%) 3.95 3.97 –0.02

Average annual GDP growth (%) 2.86 4.08 –1.22

Source: Adapted from Bartels and Brady (2003).

Hence there is evidence supporting the Hibbs model that systematic differences

exist in the policy choices and outcomes of partisan governments.

Hibbs argues that this is in line with the subjective preferences of the classbased

political constituencies of right- and left-wing political parties.