A Mark in Time Saves Nein

Abstract

A method for predicting political interactions and policy outcomes based on two political theorems is presented and illustrated with an examination of the decision to merge the two German currencies. Political perceptions and actions are anticipated by combining the substantive knowledge of area experts with the theoretical insights embedded in the median voter theorem and a monotonicity theorem that links expectations to probabilistic statements of action. The proposed model has proven accurate about 90 percent of the time.

The proposed forecasting method identifies a sequential strategy that may have been followed by Chancellor Kohl in forging the coalition needed to merge successfully the two German currencies. Using comparative statics, the analysis suggests how subtle and sophisticated Chancellor Kohl had to be to succeed in getting the policy outcome he desired despite stiff opposition.