Equilibrium Political Budget Cycles
AbstractPolitical business cycle theories generally rely on nominal rigidities and voter myopia. This paper offers an equilibrium theory that preserves some basic insights from earlier models, though with significant refinements. The "political budget cycle" emphasized here is in fiscal policy rather than output and inflation; it arises via a multidimensional signal process. One can consider the welfare implications of proposals to mitigate the cycle and the effects of altering the electoral structure. Copyright 1990 by American Economic Association.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 80 (1990)
Issue (Month): 1 (March)
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- Keech, William R. & Simon, Carl P., 1985. "Electoral and welfare consequences of political manipulation of the economy," Journal of Economic Behavior & Organization, Elsevier, vol. 6(2), pages 177-202, June.
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