Can a President Tame the Business Cycle?
As important as the economy may be for voters when they go to the polls, many economists contend that presidents have little power over general economic performance during their terms of office, even though some things, like the minimum wage, are set by the government.
David Backus, an economist at New York University, recently wrote on the blog of the economist N. Gregory Mankiw that while presidents might contribute to long-term performance, the normal ups and downs of the business cycle had more of an effect on the economy in the short term.
"There's some debate about where business cycles come from, but the president's actions are rarely on the list," he wrote. Changes in incomes, jobs and home prices reflect this cyclical behavior, while other indicators, like personal savings as a percentage of disposable income, have shown a gradual decline over decades. If there is a president to praise — or blame — for longer-term trends, he is probably not in office now.
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David Backus, an economist at New York University, recently wrote on the blog of the economist N. Gregory Mankiw that while presidents might contribute to long-term performance, the normal ups and downs of the business cycle had more of an effect on the economy in the short term.
"There's some debate about where business cycles come from, but the president's actions are rarely on the list," he wrote. Changes in incomes, jobs and home prices reflect this cyclical behavior, while other indicators, like personal savings as a percentage of disposable income, have shown a gradual decline over decades. If there is a president to praise — or blame — for longer-term trends, he is probably not in office now.