The Mass Public and Macroeconomic Performance: The Dynamics of Public Opinion Toward Unemployment and Inflation

Abstract

In every year since 1972 more than 70 percent of mass public identified an economic issue, principally inflation or unemployment, as the most important problem facing this country today. This study is motivated by belief that public opinion toward salient economic issues is an important part of domestic political environment influencing macroeconomic policy. The first few sections of article review data on public's relative aversion to inflation and unemployment in 1970s in context of recent macroeconomic history and objective and subjective costs associated with rising prices and low employment. Most of ideas discussed are embodied in a dynamic model of short-run opinion fluctuations introduced in main parts of paper. The final section considers political implications of estimation results.