Regression model for the coming election
Posted by Possum Comitatus on May 16, 2007
After gathering together the newspoll data from 1985 to the present and aggregating those into a monthly series, I thought I’d build a quick election model regression.The series used are a mix of newspoll series and economic series sourced from the RBA.These were:
GOVPRIMARY: The primary vote for the government according to the newspoll.
OPPRIMARY: The primary vote for the Opposition according to newspoll
PMDISAT:The dissatisfaction rating for the Prime Minister
PMDISAT(-1):The dissatisfaction rating for the Prime Minister lagged by one period.
OPSAT: The satisfaction rating of the Leader of the Opposition
GST: A dummy variable for the GST where it equals 1 for the period it has been operating and zero for the periods before it was introduced.
CAMP: A campaign dummy variable which equals 1 the month before the election and zero otherwise.
INT: The standard bank variable home loan interest rate.
AR(1):A first order serial correlation termm
MA(1):A first order moving average error component.
The model became:
GOVPRIMARY = 64.8207675 + 1.374899313*INT – 0.565567558*OPPRIMARY – 0.128756676*PMDISAT + 0.05746403116*OPSAT – 0.1212621617*PMDISAT(-1) – 1.720345869*GST + 2.518176146*CAMP + [AR(1)=0.8682231246,MA(1)=-0.6409529542,BACKCAST=1996:03]
Using the quaint little Eviews, the more important technical bits were:
|Dependent Variable: GOVPRIMARY|
|Method: Least Squares|
|Date: 05/17/07 Time: 00:40|
|Sample: 1996:03 2007:05|
|Included observations: 135|
|Convergence achieved after 36 iterations|
|R-squared||0.818619||Mean dependent var||43.11037|
|Adjusted R-squared||0.805559||S.D. dependent var||3.360798|
|S.E. of regression||1.481958||Akaike info criterion||3.695793|
|Sum squared resid||274.5250||Schwarz criterion||3.910998|
I spent alot of time checking for all sorts of relationships, but what was interesting was the CAMP result.The Coalition get a 2.5% boost to their primary vote in the month before the election and the GST hurt there primary vote and it has not yet recovered.
Another interesting phenomena that I came across was that the Coalition appears to get a boost in their primary vote when economic bad news is occurring, and a decline in their primary vote when the economic sunshine comes around.When the Coalition is in government:
– a 1% increase in unemployment has walked hand in hand with a 0.96% increase in their primary vote.Likewise a 1% decrease in unemployment has walked hand in hand with a 0.96% decrease in their primary vote.
– a 1% increase in the interest rate level has walked hand in hand with 1.3% increase in their primary vote.Likewise a 1% decrease in the interest rate level has walked hand in hand with 1.3% decrease in their primary vote.
When the Coalition is in opposition:
– a 1% increase in unemployment has walked hand in hand with a 1.6% increase in their primary vote.Likewise a 1% decrease in unemployment has walked hand in hand with a 1.6% decrease in their primary vote.
– a 1% increase in the interest rate level has walked hand in hand with 0.4% increase in their primary vote.Likewise a 1% decrease in the interest rate level has walked hand in hand with 0.4% decrease in their primary vote.
When times are tough, the people run to the Coalition and economic sunshine kills them.See for yourself:
|Dependent Variable: COALITION|
|Method: Least Squares|
|Date: 05/17/07 Time: 01:03|
|Sample(adjusted): 1986:01 2007:05|
|Included observations: 257 after adjusting endpoints|
|Convergence achieved after 8 iterations|
|R-squared||0.600228||Mean dependent var||44.33366|
|Adjusted R-squared||0.592265||S.D. dependent var||3.318514|
|S.E. of regression||2.119009||Akaike info criterion||4.362844|
|Sum squared resid||1127.040||Schwarz criterion||4.445702|
I bet the government is praying for a recession.