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Do Canadian Business Cycle Peaks Predict Federal Election Calls?

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Abstract

This paper examines the regularity that business cycle peaks and federal elections often arise together in parliamentary democracies as it applies to Canadian data over the post Confederation time period (1870 onwards). Breaking the simultaneity of these two events and properly identifying causality is possible we argue only if we address carefully the selection issue associated with observed events. Our results suggest that it is business cycle peaks that lead federal elections rather than the other way around. While such a finding reinforces the hypothesis of strategic election timing, the result is also insightful because it helps to explain why the predicted presence of a political business cycle is harder to find in parliamentary governments where the date of the next election is under the control of the governing political party than in democratic systems where governing durations and election dates are fixed.

Suggested Citation

  • Marcel-Cristian Voia & J. Stephen Ferris, 2011. "Do Canadian Business Cycle Peaks Predict Federal Election Calls?," Carleton Economic Papers 11-03, Carleton University, Department of Economics, revised 07 May 2012.
    • Handle: RePEc:car:carecp:11-03
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    Cited by:

    1. J. Stephen Ferris & Marcel-Cristian Voia, 2015. "Political Parties in Canada: What Determines Their Entry, Exit and the Duration of Their Lives?," Carleton Economic Papers 15-08, Carleton University, Department of Economics, revised 04 Apr 2016.
    2. Ferris, J. Stephen & Voia, Marcel C., 2015. "The effect of federal government size on private economic performance in Canada: 1870–2011," Economic Modelling, Elsevier, vol. 49(C), pages 172-185.
    3. J. Stephen Ferris & Marcel-Cristian Voia, 2014. "Does Aggregate Government Size Effect Private Economic Performance in Canada?," Carleton Economic Papers 14-13, Carleton University, Department of Economics.
    4. Petrarca, Ilaria, 2014. "No news is costly news: The link between the diffusion of the press and public spending," European Journal of Political Economy, Elsevier, vol. 34(C), pages 68-85.

    More about this item

    Keywords

    election timing; political business cycles; selection models; election hazard;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies

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