Electoral Uncertainty and the Macroeconomy: The Evidence from Canada
The partisan advantage and incumbency advantage versions of the rational partisan business cycle model are tested. Both models assume agents form weighted averages of partisan inflation rates during an election period, and differ only in how the weights are formed which alters the form of business cycles. The partisan advantage assumes fixed weights designated for both major parties in each election, whereas the incumbency advantage model assumes fixed weights for whichever is the incumbent and opposition party in each election. The symmetric representation assumes each election is a toss-up. Strongest support is found for a temporary symmetric effect on the level of output, but none of the models are supported for temporary electoral changes in growth or unemployment rates. Copyright 2002 by Kluwer Academic Publishers
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