bq. Saber rattling is a prominent tool of the U.S. president’s foreign policy leadership. Yet there has been no study of how presidential saber rattling affects international or domestic political outcomes…Theoretically, the study demonstrates that presidential rhetoric affects the risks that economic actors are willing to take, as well as the consequences of these resulting behaviors for U.S. economic performance.
bq. …increased presidential saber rattling produces increased perceptions of negative economic news, declining consumer confidence, lower personal consumption expenditures, less demand for money, and slower economic growth. More broadly, the study demonstrates an important linkage between the president’s two most important roles: foreign and economic policy leadership. The president’s foreign policy pronouncements not only impact other nations, but also affect domestic economic outcomes.
That is from a newly published piece by Dan Wood (gated; ungated). Particularly interesting is his method of measuring saber-rattling, using a combination of machine and human coding. Here’s the resulting graph:
Here is a description from Wood’s related book:
bq. Using an unprecedented compendium of every known unique statement by U.S. presidents about the economy from World War II through the first George W. Bush administration, Dan Wood measures the relative intensity and optimism of presidents’ economic rhetoric. His pathbreaking statistical analysis shows that presidential words can affect everything from approval of the president’s job performance to perceptions of economic news, consumer confidence, consumer behavior, business investment, and interest rates. The impacts are both immediate and gradual. Ultimately, Wood concludes, rhetoric is indeed a tool of presidential leadership that can be used unilaterally to affect a range of political and economic outcomes.