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Polarized business cycles

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  • Azzimonti, Marina
  • Talbert, Matthew

Abstract

Four stylized facts motivate this paper: (i) business cycle movements are wider in emerging countries (EC) than in developed ones; (ii) EC experience greater economic policy uncertainty; (iii) EC are more polarized and less politically stable; and (iv) EPU is positively related to political polarization. A standard real business cycle model augmented to incorporate political polarization, a ‘polarized business cycle’ (PBC) model, is shown to be consistent with these facts. We first derive our results analytically, and then quantify the effects of a permanent increase in polarization to the US economy.

Suggested Citation

  • Azzimonti, Marina & Talbert, Matthew, 2014. "Polarized business cycles," Journal of Monetary Economics, Elsevier, vol. 67(C), pages 47-61.
  • Handle: RePEc:eee:moneco:v:67:y:2014:i:c:p:47-61
    DOI: 10.1016/j.jmoneco.2014.07.001
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Polarized business cycles
      by Christian Zimmermann in NEP-DGE blog on 2013-12-22 07:50:50
    2. Political polarization and the business cycle
      by Economic Logician in Economic Logic on 2014-01-06 21:53:00

    Citations

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    Cited by:

    1. Grechyna, Daryna, 2016. "On the determinants of political polarization," Economics Letters, Elsevier, vol. 144(C), pages 10-14.
    2. Grechyna, Daryna, 2017. "Mandatory Spending, Political Polarization, and Macroeconomic Volatility," MPRA Paper 83452, University Library of Munich, Germany.
    3. Azzimonti, Marina, 2019. "Does partisan conflict deter FDI inflows to the US?," Journal of International Economics, Elsevier, vol. 120(C), pages 162-178.
    4. Azzimonti, Marina, 2018. "Partisan conflict and private investment," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 114-131.
    5. Marina Azzimonti, 2015. "The dynamics of public investment under persistent electoral advantage," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 653-678, July.
    6. Ellen R. McGrattan, 2017. "Intangible Capital and Measured Productivity," Staff Report 545, Federal Reserve Bank of Minneapolis.
    7. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2015. "Going to Extremes: Politics after Financial Crises, 1870-2014," CESifo Working Paper Series 5553, CESifo.
    8. Marina Azzimonti, 2018. "The Politics Of Fdi Expropriation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(2), pages 479-510, May.
    9. Funke, Manuel & Schularick, Moritz & Trebesch, Christoph, 2016. "Going to extremes: Politics after financial crises, 1870–2014," European Economic Review, Elsevier, vol. 88(C), pages 227-260.
    10. Grechyna, Daryna, 2017. "Public Policy Against Political Frictions," MPRA Paper 76396, University Library of Munich, Germany.
    11. Grechyna, Daryna, 2016. "Political frictions and public policy outcomes," Journal of Comparative Economics, Elsevier, vol. 44(3), pages 484-495.
    12. Cai, Yifei & Wu, Yanrui, 2019. "Time-varied causality between US partisan conflict shock and crude oil return," Energy Economics, Elsevier, vol. 84(C).
    13. Marina Azzimonti, 2015. "The dynamics of public investment under persistent electoral advantage," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 653-678, July.
    14. Cheng, Chak Hung Jack & Hankins, William B. & Chiu, Ching-Wai (Jeremy), 2016. "Does US partisan conflict matter for the Euro area?," Economics Letters, Elsevier, vol. 138(C), pages 64-67.
    15. Grechyna, Daryna, 2016. "The Structure of Government Spending and the Business Cycle," MPRA Paper 72029, University Library of Munich, Germany.
    16. Ellen McGrattan, 2016. "Intangible Capital and Measured Productivity," 2016 Meeting Papers 62, Society for Economic Dynamics.
    17. Azqueta-Gavaldón, Andrés, 2017. "Developing news-based Economic Policy Uncertainty index with unsupervised machine learning," Economics Letters, Elsevier, vol. 158(C), pages 47-50.
    18. Melki, Mickael & Pickering, Andrew, 2020. "Polarization and corruption in America," European Economic Review, Elsevier, vol. 124(C).
    19. Saia, Alessandro, 2018. "Random interactions in the Chamber: Legislators' behavior and political distance," Journal of Public Economics, Elsevier, vol. 164(C), pages 225-240.
    20. Daryna Grechyna, 2018. "Shall We Riot Too? The Geographical Neighbor Impact on Political Instability," Kyklos, Wiley Blackwell, vol. 71(4), pages 581-612, November.
    21. Grechyna, Daryna, 2017. "Political Instability: The Neighbor vs. the Partner Effect," MPRA Paper 79952, University Library of Munich, Germany.

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