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Political Cycles and Cyclical Policies

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  • Ohlsson, Henry
  • Vredin, Anders

Abstract

The authors test how government revenue and expenditure depend on ideology, elections, and economic activity. They show how fiscal forecasts can be used to identify the determinants of government revenue and expenditure. The approach is illustrated using a unique, unpublished Swedish data set of fiscal forecasts and forecasts of economic activity. The authors find partisan effects but no election effects. Revenue and expenditure, but also the fiscal surplus, are lower with right-wing governments. Fiscal policy has been countercyclical. Revenue varies positively with nominal earnings; expenditure varies negatively with real GDP. Copyright 1996 by The editors of the Scandinavian Journal of Economics.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 98 (1996)
Issue (Month): 2 (June)
Pages: 203-18

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Handle: RePEc:bla:scandj:v:98:y:1996:i:2:p:203-18

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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  1. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
  2. Alesina, Alberto F & Cohen, Gerald D & Roubini, Nouriel, 1992. "Macroeconomic Policy and Elections in OECD Democracies," CEPR Discussion Papers 608, C.E.P.R. Discussion Papers.
  3. Ohlsson, Henry & Vredin, Anders, 1996. " Political Cycles and Cyclical Policies," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 203-18, June.
  4. Nordhaus, William D, 1975. "The Political Business Cycle," Review of Economic Studies, Wiley Blackwell, vol. 42(2), pages 169-90, April.
  5. Cohen, Gerald & Alesina, Alberto & Roubini, Nouriel, 1992. "Macroeconomic Policy and Elections in OECD Democracies," Scholarly Articles 4553023, Harvard University Department of Economics.
  6. Edin, Per-Anders & Ohlsson, Henry, 1991. "Political determinants of budget deficits: Coalition effects versus minority effects," European Economic Review, Elsevier, vol. 35(8), pages 1597-1603, December.
  7. Alberto Alesina & Gerald D. Cohen & Nouriel Roubini, 1992. "Macroeconomic Policy And Elections In Oecd Democracies," Economics and Politics, Wiley Blackwell, vol. 4(1), pages 1-30, 03.
  8. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 102(3), pages 651-78, August.
  9. Kenneth Rogoff, 1987. "Equilibrium Political Budget Cycles," NBER Working Papers 2428, National Bureau of Economic Research, Inc.
  10. Rogoff, Kenneth & Sibert, Anne, 1988. "Elections and Macroeconomic Policy Cycles," Review of Economic Studies, Wiley Blackwell, vol. 55(1), pages 1-16, January.
  11. Alberto Alesina & Roberto Perotti, 1995. "The Political Economy of Budget Deficits," IMF Staff Papers, Palgrave Macmillan, vol. 42(1), pages 1-31, March.
  12. Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
  13. Marc Choate, G. & Thompson, Fred, 1990. "Biased budget forecasts," Journal of Economic Behavior & Organization, Elsevier, vol. 14(3), pages 425-434, December.
  14. Alesina, Alberto & Cohen, Gerald D. & Roubini, Nouriel, 1993. "Electoral business cycle in industrial democracies," European Journal of Political Economy, Elsevier, vol. 9(1), pages 1-23, March.
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Cited by:
  1. Ohlsson, Henry & Vredin, Anders, 1994. "Political Cycles and Cyclical Policies. A New Test Approach Using Fiscal Forecasts," Working Paper Series in Economics and Finance 9, Stockholm School of Economics.
  2. Anders Bergvall, 2005. "Exchange rate regimes and macroeconomic stability: the case of Sweden," Oxford Economic Papers, Oxford University Press, vol. 57(3), pages 422-446, July.
  3. Carlsson, M., 2000. "Measures of Technology and the Short-Run Responses to Technology Shocks - Is the RBC-Model Consistent with Swedish Manufacturing Data?," Papers 2000-20, Uppsala - Working Paper Series.
  4. Bergvall, Anders, 2002. "The Stabilizing Properties of Floating Exchange Rates: Some International Evidence," Working Paper Series 2002:14, Uppsala University, Department of Economics.
  5. Stijn Goeminne & Benny Geys & Carine Smolders, 2008. "Political fragmentation and projected tax revenues: evidence from Flemish municipalities," International Tax and Public Finance, Springer, vol. 15(3), pages 297-315, June.
  6. Easaw, J. Z. & Garratt, D., 1999. "UK government expenditure and electoral security in the 1980s: a non-linear analysis," Economics Letters, Elsevier, vol. 62(3), pages 287-292, March.
  7. Cusack, Thomas R., 1997. "Partisan politics and fiscal policy," Discussion Papers, Research Unit: Economic Change and Employment FS I 97-306, Social Science Research Center Berlin (WZB).
  8. Mattias Erlandsson, 2004. "Partisan Differences in Swedish Macroeconomic Policy," Public Choice, Springer, vol. 120(1_2), pages 205-220, 07.
  9. Price, Simon, 1997. " Political Business Cycles and Macroeconomic Credibility: A Survey," Public Choice, Springer, vol. 92(3-4), pages 407-27, September.
  10. Florian Chatagny, 2013. "Incentive Effects of Fiscal Rules on the Finance Minister’s Behaviour: Evidence from Revenue Projections in Swiss Cantons," KOF Working papers 13-347, KOF Swiss Economic Institute, ETH Zurich.
  11. Borge, Lars-Erik, 2005. "Strong politicians, small deficits: evidence from Norwegian local governments," European Journal of Political Economy, Elsevier, vol. 21(2), pages 325-344, June.
  12. Ozkan, F Gulcin, 1998. "Partisan Business and Budget Cycles with Separate Fiscal and Monetary Authorities," The Manchester School of Economic & Social Studies, University of Manchester, vol. 66(2), pages 178-95, March.
  13. Susanna-maria Paleologou, 2005. "Political manoeuvrings as sources of measurement errors in forecasts," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 24(5), pages 311-324.
  14. Vartiainen, Juhana, 1998. "Understanding Swedish Social Democracy: Victims of Success?," Oxford Review of Economic Policy, Oxford University Press, vol. 14(1), pages 19-39, Spring.
  15. Ozkan, F Gulcin, 2000. " Who Wants an Independent Central Bank? Monetary Policy-Making and Politics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(4), pages 621-43, December.

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