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A Common Election Day for the Euro Zone?

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  • Fritz Breuss

Abstract

This paper tests for the Euro zone the hypothesis put forward by Sapir and Sekkat (1999) that synchronizing elections might improve welfare. Implementing political business cycle features into a politico-macroeconomic model of the Euro zone allows us to simulate the effects of adopting a common election day in the 12 Euro zone member states. The results support most of the theoretical predictions by Sapir-Sekkat: (i) Synchronizing the elections could enhance GDP growth, reduce unemployment, but leads to increased inflation and in some countries to a deterioration of the budget; higher inflation could force the ECB to monetary restrictions. (ii) If the synchronization happens asymmetrically - either only in the large or only in the small Euro zone countries - the result depends on the size of the spillovers. (iii) As anticipated in Sapir-Sekkat a common election day is a further step towards the desired 'European business cycle', however, at the cost of increasing its amplitude. Harmonizing elections is another method of policy coordination. Whether this leads to higher welfare is a matter of weighting the different macroeconomic outcomes and it also depends on the model applied. Copyright 2008 Blackwell Publishing Ltd..

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  • Fritz Breuss, 2008. "A Common Election Day for the Euro Zone?," Kyklos, Wiley Blackwell, vol. 61(1), pages 19-32, February.
  • Handle: RePEc:bla:kyklos:v:61:y:2008:i:1:p:19-32
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    1. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135-135.
    2. Alberto Alesina & Nouriel Roubini & Gerald D. Cohen, 1997. "Political Cycles and the Macroeconomy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262510944, January.
    3. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
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    Cited by:

    1. Eric Dubois, 2016. "Political business cycles 40 years after Nordhaus," Public Choice, Springer, vol. 166(1), pages 235-259, January.
    2. Fritz Breuss, 2009. "Lack of Cyclical Convergence Puts Euro Area at Risk," WIFO Monatsberichte (monthly reports), WIFO, vol. 82(2), pages 125-138, February.
    3. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    4. Fritz Breuss, 2009. "Lacking "Europeanisation" of National Business Cycles as a Risk for the Euro Area," Austrian Economic Quarterly, WIFO, vol. 14(2), pages 91-104, June.
    5. repec:hal:journl:hal-01291401 is not listed on IDEAS

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