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Does the Fed Contribute to a Political Business Cycle?

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  • Burton Abrams
  • Plamen Iossifov

Abstract

In contrast to findings of other studies, evidence is presented to support the existence of a Federal Reserve-induced political monetary cycle that corresponds to the U.S. presidential election cycle. Using various Taylor rules, we find support for the view that Fed policy turns significantly more expansionary in the seven quarters prior to the election, but only when the Fed chair and incumbent presidential party have partisan affiliations. Copyright Springer Science+Business Media, Inc. 2006

Suggested Citation

  • Burton Abrams & Plamen Iossifov, 2006. "Does the Fed Contribute to a Political Business Cycle?," Public Choice, Springer, vol. 129(3), pages 249-262, December.
    • Handle: RePEc:kap:pubcho:v:129:y:2006:i:3:p:249-262
    DOI: 10.1007/s11127-006-9017-0
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