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Political Business Cycle (political + business_cycle)
Selected AbstractsIt Takes Two to Tango: Lobbies and the Political Business CycleKYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 3 2010Daniel Horgos SUMMARY Merging the impacts of interest groups on economic growth with governments' interest in unemployment and inflation, there should be a link between political business cycles and interest group formation. Interpreting Olson's Law in a short-run perspective and integrating it with political business cycles, this contribution examines the link. We illustrate how such a model could look like, before investigating the relationship of lobbies, governments and voters empirically. As the time-series-analysis based on the German lobby-list shows, lobbies strategically organize their activity to foster reelection of the governments: It takes two to tango. [source] Political Business Cycles and Central Bank Independence*THE ECONOMIC JOURNAL, Issue 486 2003John Maloney This paper develops a dynamic model of Rational Partisan Business Cycles in which wage contracts overlap elections and wage setters have to make a prediction about the election result. Empirical analysis of 20 OECD countries supports the theoretical implication that left wing incumbents increase output, but increased expectation of a left wing regime reduces it. The model is extended to incorporate the effects of alternative measures of Central Bank Independence (CBI). The measure of objective independence outperforms the other measures and it is found that CBI reduces politically induced business cycles. [source] Canadian Provincial Budget Outcomes: A Long,run and Short,run PerspectiveFINANCIAL ACCOUNTABILITY & MANAGEMENT, Issue 4 2002Christopher G. Reddick This paper tests a theory of public budgeting as a long,run and short,run process. In this model, political decision makers strive to achieve budgetary balance over the long,run but are constrained in the short,run and follow incremental decision,making. First, the budget equilibrium theory is elaborated upon and is used to explain the relationship between revenues, expenditures, and debt along with control variables one being provincial general elections. Second, the interaction between these variables is tested with a vector error correction model for each of the Canadian provinces using annual data between 1961 and 2000. The results show that in the long,run the driving force of provincial budgeting was expenditure control initiatives in seven of the ten provinces. In the short,run, incrementalism occurred in all of the provinces and a political business cycle was evident in six provinces. [source] Political Macroeconomics: A Survey of Recent DevelopmentsJOURNAL OF ECONOMIC SURVEYS, Issue 5 2000Manfred Gärtner The paper surveys political macroeconomics, covering its development from Rogoff's conservative central banker to the most recent discussions of monetary policy and institutional design. Topics include the inflation-stabilization trade-off, central bank independence with escape clauses and overruling with costs, inflation targets, performance contracts for monetary authorities, and the consequences of output persistence for these issues. Further topics are the political business cycle when output is persistent, the political macroeconomics of fiscal policy, the government spending bias, and the game-theoretic interaction between fiscal and monetary policy. All work is discussed within a coherent analytical framework. [source] Political manipulation in a majoritarian democracy: central government targeting of public funds to English subnational government, in space and across timeBRITISH JOURNAL OF POLITICS & INTERNATIONAL RELATIONS, Issue 3 2001Peter John This article argues that it is rational for the executive to target resources in space and through time if it seeks to maximise its chances of electoral success. In majoritarian democracies such as the United Kingdom, there are particularly strong incentives to target resources to marginal legislative constituencies, although similar opportunies exist in other political systems. The benefits of such a practice could be growing, because the costs of forms of temporal targeting predicted by theories of the political business cycle have increased, owing to the effect of the global economy. In the United Kingdom one channel through which resources can be targeted is central grants to local authorities. This model is tested with pooled cross-section data on the central finance of English local government between 1981/1982,1995/1996. The article confirms that central government spatially targeted marginals after 1988/1989 while it continued to allocate greater funds near national elections, conditional on its opinion-poll ratings. Hypotheses from the literature on distributional politics are also tested, finding evidence for the temporal allocation of resources to win local elections. [source] POLITICAL MONETARY CYCLES UNDER ALTERNATIVE INSTITUTIONS: THE INDEPENDENT TREASURY AND THE FEDERAL RESERVEECONOMICS & POLITICS, Issue 3 2005Jac C. Heckelman The theory of opportunistic political business cycles predicts incumbent politicians will alter their economic policies to spur short-run growth to attract additional votes for the upcoming election. There has not been much emphasis on the possibility of historical political business cycles prior to the Keynesian Revolution. No study has yet undertaken a systematic approach to testing for policy cycles during this period. Our study will bridge this gap by considering cycles in monetary policy for the periods of 1879,1914 until the start of Fed operations, and 1914,1932 until abandonment of the gold standard. To properly test for political cycles, it is necessary to develop reaction functions for the Treasury and compare against the reaction function later held by the Fed. This also reveals that creation of an independent monetary authority to be insulated from political pressures changed the manner in which policy was directed, aside from political issues. The evidence is not consistent, however, with monetary cycles closely tied to electoral concerns. [source] Unemployment and Inflation Consequences of Unexpected Election ResultsJOURNAL OF MONEY, CREDIT AND BANKING, Issue 8 2007MICHAEL BERLEMANN rational partisan theory; political business cycles; election outcome uncertainty The empirical evidence toward rational partisan theory of business cycles is mixed and thus inconclusive. This is due to the enormous heterogeneity of the existing empirical studies. Only a few of these test explicitly for the central theoretical innovation that post-electoral blips in economic activity depend on the degree of the electoral surprise. Using polling data we present empirical evidence in favor of rational partisan theory for a panel of OECD countries. [source] It Takes Two to Tango: Lobbies and the Political Business CycleKYKLOS INTERNATIONAL REVIEW OF SOCIAL SCIENCES, Issue 3 2010Daniel Horgos SUMMARY Merging the impacts of interest groups on economic growth with governments' interest in unemployment and inflation, there should be a link between political business cycles and interest group formation. Interpreting Olson's Law in a short-run perspective and integrating it with political business cycles, this contribution examines the link. We illustrate how such a model could look like, before investigating the relationship of lobbies, governments and voters empirically. As the time-series-analysis based on the German lobby-list shows, lobbies strategically organize their activity to foster reelection of the governments: It takes two to tango. [source] | ||||||||||