Fair Econometric Model predicts election outcome …

It’s called the Fair Model – not because it’s unusually unbiased (though I assume it is unbiased – but because its creator id Prof Ray Fair … currently at Yale, previously at Princeton.

click for Prof. Fair’s original article
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We’re reporting the results for 2 reasons.

First, because I was one of Prof. Fairs research assistants at Princeton … he was the person who introduced me to econometrics … and, for that I’ll be forever grateful.

Second, because Prof. Fair’s modeling has essentially reduced presidential election outcomes down to 3 economic variables:

  • The per capita growth rate of gross domestic product in the three quarters before the elections. For the first three quarters of this year, GDP per capita grew at a 1.01% annual rate.
  • Inflation over the course of the entire presidential term, as measured by the GDP price index. The annual rate of inflation by this measure was 1.58%.
  • The number of quarters during the presidential term that GDP per capita growth exceeded 3.2%. There has been only one such “good news” quarter — the fourth quarter of last year, when GDP per capita grew 3.3%.

According to the WSJ, plug those figures into Prof. Fair’s econometric model and Romney edges Obama 51 to 49.

Said differently, “if Romney doesn’t win, it will have been despite an economy that Mr. Fair’s model suggests should have been in his favor.”

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