The political timing of errors in inflation forecasts

Errors in inflation forecasts do not display a regular electoral rhythm over the entire post-war period. These results are consistent with the work of McCallum (1978) who explored a sample of similar length and failed to find an electoral pattern in unemployment rates. However, if unanticipated inflation is regarded as a lagging indicator of policy effectiveness, then the data do suggest that three of the four most recent administrations have enjoyed a certain success in manufacturing a pre-election upturn. The data also show a significant tendency for low popularity ratings to have been followed by a rise in unexpected inflation. For Democratic administrations, this response was no greater when voter disapproval was perceived in an election year than when it was observed over the general course of the Presidential term. For Republican administrations, however, there was more of a response in unexpected inflation to popularity ratings in an election year.