The purpose of this paper is to test for evidence of opportunistic `political business cycles' in a large sample of 18 OECD economies. Our results can be summarized as follows. First, we find very little evidence of pre-electoral effects of economic outcomes, in particular, on GDP growth and unemployment. Second, we see some evidence of `political monetary cycles', that is, expansionary monetary policy in election years. Third, we observe indications of `political budget cycles', or `loose' fiscal policy prior to elections. Fourth, inflation exhibits a post-electoral jump, which could be explained by either the pre-electoral `loose' monetary and fiscal policies and/or by an opportunistic timing of increases in publicly controlled prices, or indirect taxes.
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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number
608.
Find related papers by JEL classification: D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Olivier J. Blanchard & Lawrence H. Summers, 1986.
"Hysteresis And The European Unemployment Problem,"
NBER Chapters,
in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90
National Bureau of Economic Research, Inc.
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