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Multiparty Competition, Founding Elections and Political Business Cycles in Africa

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  • Steven A. Block
  • Smita Singh
  • Karen E. Ferree

Abstract

Political business cycle theory largely abstracts from institutional context, in particular assuming that elections are competitive. Yet, as empirical work on political business cycles turns increasingly to developing countries and nascent democracies for evidence, this assumption becomes untenable. We propose and test two empirical hypotheses: first, we should only see cycles when elections involve multiparty competition; second, we should see larger cycles in founding elections. Using an indicator of multiparty competition and applying recent advances in dynamic panel (generalized method of moments) econometrics to data from Africa, we find strong support for both hypotheses. These findings have implications for democratic transitions and the compatibility of economic and political reform in nascent democracies.

Suggested Citation

  • Steven A. Block & Smita Singh & Karen E. Ferree, 2001. "Multiparty Competition, Founding Elections and Political Business Cycles in Africa," CID Working Papers 80A, Center for International Development at Harvard University.
  • Handle: RePEc:cid:wpfacu:80a
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    File URL: https://www.hks.harvard.edu/sites/default/files/centers/cid/files/publications/faculty-working-papers/080.pdf
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    References listed on IDEAS

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    1. repec:cup:apsrev:v:71:y:1977:i:04:p:1467-1487_26 is not listed on IDEAS
    2. Klein, Michael W. & Marion, Nancy P., 1997. "Explaining the duration of exchange-rate pegs," Journal of Development Economics, Elsevier, vol. 54(2), pages 387-404, December.
    3. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    4. Schultz, Kenneth A., 1995. "The Politics of the Political Business Cycle," British Journal of Political Science, Cambridge University Press, vol. 25(01), pages 79-99, January.
    5. Alberto Alesina, 1987. "Macroeconomic Policy in a Two-Party System as a Repeated Game," The Quarterly Journal of Economics, Oxford University Press, vol. 102(3), pages 651-678.
    6. 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.
    7. Schuknecht, Ludger, 1996. "Political Business Cycles and Fiscal Policies in Developing Countries," Kyklos, Wiley Blackwell, vol. 49(2), pages 155-170.
    8. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    9. Alesina, Alberto, 1987. "Macroeconomic Policy in a Two-party System as a Repeated Game," Scholarly Articles 4552531, Harvard University Department of Economics.
    10. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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    Citations

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    Cited by:

    1. Alesina, Alberto & Stella, Andrea, 2010. "The Politics of Monetary Policy," Handbook of Monetary Economics,in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 18, pages 1001-1054 Elsevier.
    2. Macatan Humphreys & Robert H. Bates, 2002. "Political Institutions and Economic Policies: Lessons from Africa," CID Working Papers 94, Center for International Development at Harvard University.
    3. Steven A. Block & Burkhard N. Schrage & Paul M. Vaaler, 2003. "DEMOCRACY???S SPREAD: Elections and Sovereign Debt in Developing Countries," William Davidson Institute Working Papers Series 2003-575, William Davidson Institute at the University of Michigan.

    More about this item

    Keywords

    elections; political business cycles; Africa; democratization;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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