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Policy Makers' Preferences, Party Ideology, and the Political Business Cycle

  • Stefan Krause
  • Fabio Mendez

We generate a time-series of relative preferences of policy makers for inflation stability using a sample of 24 countries in order to study the behavior of political parties. Such behavior is essential in both the partisan cycle models and the opportunistic political cycle analysis. Our evidence tends to support the partisan view, with right-wing parties exhibiting a higher preference towards stabilizing inflation than left-wing parties, while obtaining mixed results on the opportunistic behavior of incumbent parties. Finally, when we analyze the behavior of separate ideologies, we find overwhelming support of party resemblance on election year and evidence favoring an opportunistic conduct by right-wing parties.

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Paper provided by Department of Economics, Emory University (Atlanta) in its series Emory Economics with number 0319.

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Date of creation: Oct 2003
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Handle: RePEc:emo:wp2003:0319
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