Presidential War Talk and Macroeconomic Performance.

We explore the effect of presidential war-talk on consumer attitudes and behavior. Using time series data running from January 1978 through June 2003, we use vector autoregression to show that increased presidential war-talk produces declining consumer confidence and personal consumption. We also find that presidential war-talk may increase consumer perceptions of negative economic news. The analysis also contained limited evidence that negative economic news can lead presidents to increase war-talk. Given the dual leadership responsibilities of the U.S. president for the economy and foreign policy, our results suggest that presidents should use war-talk cautiously to maintain stable economic performance. [ABSTRACT FROM AUTHOR]