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Political Business Cycles and Macroeconomic Credibility: A Survey

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  • Price, Simon

Abstract

There is clear evidence that government popularity and election performance is affected, in part, by economic performance, suggesting that governments may manipulate the economy to political advantage. Simple models incorporating adaptive expectations which allowed the government to exploit this relationship were developed in the 1970s, but fell out of fashion with the advent of new-classical economics. However, modern theories of the political business cycle, which are closely related to the macroeconomic policy game literature, assume rational expectations, and lead to forms of political business cycle, driven by the existence of uncertainty of one type or another. The international evidence suggests that some aspects of the theories apply, although definitive conclusions are--as we might expect--hard to come by. Copyright 1997 by Kluwer Academic Publishers

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  • Price, Simon, 1997. "Political Business Cycles and Macroeconomic Credibility: A Survey," Public Choice, Springer, vol. 92(3-4), pages 407-427, September.
  • Handle: RePEc:kap:pubcho:v:92:y:1997:i:3-4:p:407-27
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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. Burton Abrams & Plamen Iossifov, 2006. "Does the Fed Contribute to a Political Business Cycle?," Public Choice, Springer, vol. 129(3), pages 249-262, December.
    3. Burton A. Abrams, 2006. "How Richard Nixon Pressured Arthur Burns: Evidence from the Nixon Tapes," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 177-188, Fall.
    4. Niklas Potrafke, 2012. "Political cycles and economic performance in OECD countries: empirical evidence from 1951–2006," Public Choice, Springer, vol. 150(1), pages 155-179, January.
    5. Verstyuk Sergey, "undated". "Electoral cycles in Ukraine," EERC Working Paper Series 02-209e, EERC Research Network, Russia and CIS.
    6. Chun-ping Chang & Yung-hsiang Ying & Meng-chi Hsieh, 2009. "Impact Of Macroeconomic Conditions On Government Popularity: An Ecowas Investigation," South African Journal of Economics, Economic Society of South Africa, vol. 77(1), pages 28-44, March.
    7. Keshab Bhattarai, 2015. "Financial Deepening and Economic Growth in Advanced and Emerging Economies," Review of Development Economics, Wiley Blackwell, vol. 19(1), pages 178-195, February.
    8. Mechtel, Mario & Potrafke, Niklas, 2009. "Political Cycles in Active Labor Market Policies," MPRA Paper 14270, University Library of Munich, Germany.
    9. Eric Dubois, 2016. "Political Business Cycles 40 Years after Nordhaus," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01291401, HAL.
    10. repec:hal:journl:hal-01291401 is not listed on IDEAS
    11. Nie, Huihua & Jiang, Minjie & Wang, Xianghong, 2013. "The impact of political cycle: Evidence from coalmine accidents in China," Journal of Comparative Economics, Elsevier, vol. 41(4), pages 995-1011.

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