Munich Personal RePEc Archive

Economic scenario of United States of America before and after 2012 U.S. Presidential Election

Sinha, Pankaj and Singhal, Anushree and Sondhi, Kriti (2012): Economic scenario of United States of America before and after 2012 U.S. Presidential Election.

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Abstract

This paper examines the economic scenario of the United States, before and after the 2012 US Presidential election by analyzing various macroeconomic variables such as GDP, Public Debt, Exchange Rate, Social Benefit Spending, Trade, Budget Deficit/ Surplus, Unemployment Rate, Inflation and others. We forecast the macroeconomic variables post 2012 using ARIMA modeling and present a picture of the U.S. economy post 2012 US Presidential election. With GDP growth being the major focus, both the parties are formulating policies to promote faster economic recovery by making reforms to reduce the $1 trillion deficit and maintain a balanced budget. Democratic Candidate Barack Obama has policies in place to increase investment in healthcare and education, open up opportunities, favour middle class families, a better trained workforce, double up exports and cuts in military expenses. Whereas Republican Candidate Mitt Romney’s focus is to achieve energy independence, open trade, champion small businesses and lower the tax rates along with lowering expenses. In this paper, we analyze the impact of expected outcome of 2012 U.S. presidential election on various macroeconomic variables of U.S. economy. The findings indicate that GDP is expected to grow at an average of about 2 percent and that a recession is not impending in 2013. Also going by the current policies, it is forecasted that U.S. exports and imports are expected to increase as the U.S. economy recovers. Barack Obama’s policies will inflate the Budget deficit while Mitt Romney’s strategy will lower the US Public Debt and Budget deficit. ARIMA models indicate that with the continuance of present government’s policies, budgetary deficit is estimated to decrease to 4.55 percent of GDP in 2014 from a maximum of 10.1 percent of GDP in 2010.

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