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Political business cycles in a dynamic bipartisan voting model

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  • Jindapon, Paan
  • Van Essen, Matt

Abstract

We provide a microfoundation for the existence of political business cycles generalizing and extending the classic Nordhaus model. Using a differential games approach, we model the strategic interaction of legislators in an election period and show that cycles can exist in equilibrium. The existence and shape of cycles depend on the parameters of the model and the initial level of unemployment. In addition, we offer an extension of the model to incorporate presidential veto behavior.

Suggested Citation

  • Jindapon, Paan & Van Essen, Matt, 2019. "Political business cycles in a dynamic bipartisan voting model," Mathematical Social Sciences, Elsevier, vol. 102(C), pages 15-23.
    • Handle: RePEc:eee:matsoc:v:102:y:2019:i:c:p:15-23
    DOI: 10.1016/j.mathsocsci.2019.08.004
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