Partisan Conflict and Uncertainties Spillover in the United States
Partisan Conflict and Uncertainties Spillover in the United States

Summary/Abstract: Given the increasing political polarization in the United States, especially on cogent issues of climate change, health policy, immigration, and recently the handling of the Coronavirus pandemic, the current study divulged further on the link between policy divides and partisan conflict. In the context, we employed the Diebold and Yilmaz index model to examine the potential spillover effect among partisan conflict (PC), economic policy uncertainty (EPU), fiscal policy (FP), and monetary policy (MP) over the period from January 1996 to June 2020 for the case of the United States. Importantly, the result posits a total spillover index (interconnectedness) of 30.04% among the examined variables, thus showing that shock transmission exists among these variables. In addition, the EPU transmits the largest share of shock (56.78%) to PC, FP, and MP, thus illustrating that the EPU is the only net giver of potential shock but with a net spillover of (+) 12.325%. Moreover, with the largest spillover index of 84.569%, PC directly contributes the largest shock to the EPU (6.691%), which is followed by a direct 4.608% to fiscal policy and a lower shock of 0.526% to monetary policy. Apart from making a significant contribution to the existing literature on partisan conflict in the United States, this study further highlighted the grey area to pursuing more inclusive democratic discourse and dialogue among the country’s social, cultural, and political representations.

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