A lagged dependent variable in an OLS regression is often used as a means of capturing dynamic effects in political processes and as a method for ridding the model of autocorrelation. But recent work contends that the lagged dependent variable specification is too problematic for use in most situations. More specifically, if residual autocorrelation is present, the lagged dependent variable causes the coefficients for explanatory variables to be biased downward. We use a Monte Carlo analysis to assess empirically how much bias is present when a lagged dependent variable is used under a wide variety of circumstances. In our analysis, we compare the performance of the lagged dependent variable model to several other time series models. We show that while the lagged dependent variable is inappropriate in some circumstances, it remains an appropriate model for the dynamic theories often tested by applied analysts. From the analysis, we develop several practical suggestions on when and how to use lagged dependent variables on the right-hand side of a model.

This article assesses the influence of income inequality on the public's policy mood. Recent work has produced divergent perspectives on the relationship between inequality, public opinion, and government redistribution. One group of scholars suggests that unequal representation of different income groups reproduces inequality as politicians respond to the preferences of the rich. Another group of scholars pays relatively little attention to distributional outcomes but shows that government is generally just as responsive to the poor as to the rich. Utilizing theoretical insights from comparative political economy and time-series data from 1952 to 2006, supplemented with cross-sectional analysis where appropriate, we show that economic inequality is, in fact, self-reinforcing, but that this is fully consistent with the idea that government tends to respond equally to rich and poor in its policy enactments.

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This book revolves around one central question: do political dynamics have a systematic and predictable influence on distributional outcomes in the United States? The answer is a resounding yes. Utilizing data from mass income surveys, elite surveys and aggregate time series, as well as theoretical insights from both American and comparative politics, Kelly shows that income inequality is a fundamental part of the US macro political system. Shifts in public opinion, party control of government and the ideological direction of policy all have important consequences for distributional outcomes. Specifically, shifts to the left produce reductions in inequality through two mechanisms - explicit redistribution and market conditioning. Whereas many previous studies focus only on the distributional impact of redistribution, this book shows that such a narrow strategy is misguided. In fact, market mechanisms matter far more than traditional redistribution in translating macro political shifts into distributional outcomes.

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