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Political Business Cycles and Macroeconomic Credibility: A Survey

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  • Price, Simon

Abstract

There is clear evidence that government popularity and election performance is affected, in part, by economic performance, suggesting that governments may manipulate the economy to political advantage. Simple models incorporating adaptive expectations which allowed the government to exploit this relationship were developed in the 1970s, but fell out of fashion with the advent of new-classical economics. However, modern theories of the political business cycle, which are closely related to the macroeconomic policy game literature, assume rational expectations, and lead to forms of political business cycle, driven by the existence of uncertainty of one type or another. The international evidence suggests that some aspects of the theories apply, although definitive conclusions are--as we might expect--hard to come by. Copyright 1997 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Public Choice.

Volume (Year): 92 (1997)
Issue (Month): 3-4 (September)
Pages: 407-27

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Handle: RePEc:kap:pubcho:v:92:y:1997:i:3-4:p:407-27

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Cited by:
  1. Nie, Huihua & Jiang, Minjie & Wang, Xianghong, 2013. "The impact of political cycle: Evidence from coalmine accidents in China," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 995-1011.
  2. Mechtel, Mario & Potrafke, Niklas, 2009. "Political Cycles in Active Labor Market Policies," MPRA Paper 14270, University Library of Munich, Germany.
  3. Potrafke, Niklas, 2012. "Political cycles and economic performance in OECD countries: Empirical evidence from 1951-2006," Munich Reprints in Economics, University of Munich, Department of Economics 19272, University of Munich, Department of Economics.
  4. Burton A. Abrams, 2006. "How Richard Nixon Pressured Arthur Burns: Evidence from the Nixon Tapes," Working Papers, University of Delaware, Department of Economics 06-04, University of Delaware, Department of Economics.
  5. Burton Abrams & Plamen Iossifov, 2006. "Does the Fed Contribute to a Political Business Cycle?," Public Choice, Springer, Springer, vol. 129(3), pages 249-262, December.

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