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Political cycles and economic performance in OECD countries: empirical evidence from 1951–2006

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  • Niklas Potrafke

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Abstract

This paper examines whether electoral motives and government ideology influence short-term economic performance. I employ data on annual GDP growth in 21 OECD countries over the 1951-2006 period and provide a battery of empirical tests. In countries with two-party systems GDP growth is boosted before elections and, under leftwing governments, in the first two years of a legislative period. These findings indicate that political cycles are more prevalent in two-party systems because voters can clearly punish or reward political parties for governmental performance. My findings imply that we need more elaborate theories of how government ideology and electoral motives influence short-term economic performance.

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Article provided by Springer in its journal Public Choice.

Volume (Year): 150 (2012)
Issue (Month): 1 (January)
Pages: 155-179

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Handle: RePEc:kap:pubcho:v:150:y:2012:i:1:p:155-179

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Web page: http://www.springerlink.com/link.asp?id=100332

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Keywords: Political cycles; Partisan politics; Electoral motives; Government ideology; Short-term economic performance; Panel data; D72; O57; C23;

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Cited by:
  1. Mario Mechtel & Niklas Potrafke, 2011. "Electoral Cycles in Active Labor Market Policies," Working Paper Series of the Department of Economics, University of Konstanz 2011-39, Department of Economics, University of Konstanz.
  2. Niklas Potrafke, 2011. "Does government ideology influence budget composition? Empirical evidence from OECD countries," Economics of Governance, Springer, vol. 12(2), pages 101-134, June.
  3. Georgios Efthyvoulou, 2012. "Political budget cycles in the European Union and the impact of political pressures," Public Choice, Springer, vol. 153(3), pages 295-327, December.
  4. François Facchini & Mickaël Melki, 2012. "Political Ideology and Economic Growth in a Democracy : The French Experience, 1871 - 2009," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00662838, HAL.
  5. Geys, Benny, 2011. "Election cycles in MPs' outside interests? The UK House of Commons, 2005-2010," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2011-104, Social Science Research Center Berlin (WZB).
  6. Yoshito Funashima, 2012. "Counter-cyclical policy and political manipulation: An empirical analysis of Japanese government expenditures," Economics Bulletin, AccessEcon, vol. 32(3), pages 1902-1913.

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