ECONOMIC BEHAVIOR OF MACROECONOMIC VARIABLES DURING PRESIDENTIAL ELECTION YEARS This research examines the economic behavior of selected macroeconomic variables during presidential election years. The macroeconomic variables of concern in this research are interest rates, governmental spending, investment, net exports, price levels, and money supply. The behavior of these variables is examined with respect to data for the inclusive period 1960 (first calendar quarter) to 1988 (second calendar quarter).
Methodologically, this research is performed within the framework of the IS LM Model. The IS LM model is so named for the two curves included in its structure. The IS curve reflects the "various combinations of national income and interest rates for which leakages will be equated with injections" (Gwartney, Stroup, and Studenmund, 1990, A 14). The LM curve reflects the "combinations of interest rates and income levels that are consistent with equilibrium in the monetary sector" (Gwartney, Stroup, and Studenmund, 1990, A 15).
Interest, in the early development period of capitalism, was regarded simply as the rate of return on capital invested (Ekelund and Hebert, 1990, p. 90). At this time, interest, as income on capital, was considered to be analogous to rent on land. As economic theory developed, however, the nature of interest, and the determinants of interest rates began to be perceived in more complex terms. Cl
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