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Is the political business cycle for real?

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  • S. Brock Blomberg
  • Gregory D. Hess

Abstract

This paper's macroeconomic model combines features from both real and political business cycle models. It augments a standard real business cycle tax model by allowing for varying levels of government partisanship and competence in order to replicate two important empirical regularities: First, that on average the economy expands early under Democratic presidents and contracts early under Republican presidents. Second, that presidents whose parties successfully retain the presidency have stronger-than-average growth in the second half of their terms. The model generates both of these features in conformity with U.S. post-World War II data.

Suggested Citation

  • S. Brock Blomberg & Gregory D. Hess, 2000. "Is the political business cycle for real?," Working Papers (Old Series) 0016, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:0016
    DOI: 10.26509/frbc-wp-200016
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