Political Business Cycles and Russian Elections, or the Manipulations of ‘Chudar’

Political business cycle theories tend to focus on one policy instrument or macroeconomic lever at a time. Efforts to find empirical evidence of opportunistic business cycles have turned up rather meagre results. We suggest that these facts may be related. If ways of manipulating the economy to win votes are thought of as substitutes, with changing relative costs, one would expect rational policy makers to switch between them in different periods as costs change. We illustrate this argument with a discussion of Russia. In Russia, four nationwide votes have been held since 1993. We deduce the set of policies that a rational, behind-the-scenes strategist – the ‘Chudar’ of the title – would recommend to an incumbent who believes the voters to vote retrospectively. We show that the expectations are borne out closely in the actual macroeconomic data.