Location of Repository

An Analysis Of Political Business Cycle Theory and its Relationship with the New Political Macroeconomics.

By Dean Garratt

Abstract

The paper analyses the four principal model types that comprise the political business cycle literature. It then considers how this literature complements the ‘new political macroeconomics’ in analysing the impact of politics on inflation. Political business cycle models can be classified according to the political motivations of opportunism and ideology as well as by the way in which individuals form expectations. Using these classifications we pay particular attention to the underlying assumptions of the models. The paper concludes that a satisfactory model should incorporate the possibility of both ideological and opportunistic behaviour. While some academics continue to frown at the political business cycle literature, the ‘new political macroeconomics’ has generally been well received, perhaps as a consequence of its foundations stemming from the new classical macroeconomic revolution of the 1970s. However, the two have common political foundations in exploring the effect of political incentives on macroeconomic variables. The incorporation of rational expectations by political business cycle theorists has united the two strands of literature to some extent and yet, as we explain, there remain factors that one can take from the political business cycle literature and incorporate within the new political macroeconomics

Topics: Political business cycles, objective functions, opportunism, ideology, inflation bias
Publisher: Dept. of Economics, University of Leicester.
Year: 1998
OAI identifier: oai:lra.le.ac.uk:2381/4307

Suggested articles

Preview

Citations

  1. (1981) A politico-economic model of the UK: New estimates and predictions,The doi
  2. (1982) Economic outcomes and political support for British governments among occupational classes, doi
  3. (1986) Political parties and macroeconomic policies and outcomes in the United States,
  4. (1992) Partisan theory after fifteen years, doi
  5. (1977). 6 See in particular, Hibbs
  6. 9 In 1986(4) 33% of voters thought the Conservatives would win the next election and 44% Labour.
  7. (1978). A model of politico-economic behaviour in the UK, doi
  8. (1977). A political model of the business cycle,
  9. (1970). Analysing the American income distribution,
  10. (1978). and Frey and Schneider doi
  11. (1982). Does there exist a political business cycle: A Box-Tiao analysis,Public doi
  12. (1993). Economic policy, performance and elections,
  13. (1988). Elections and macroeconomic policy cycles, doi
  14. (1990). Equilibrium political budget cycles, doi
  15. (1996). Fiscal policy, public debt stabilisation and politics: Theory and UK evidence, doi
  16. (1988). for supportive evidence in the UK for outcome and instrument cycles; Alesina and Roubini
  17. (1958). Forces widening occupational wage differentials, doi
  18. (1989). Government spending and budget deficits in the industrial countries, doi
  19. (1972). Inflation Policy and Unemployment Theory. doi
  20. (1992). M acroeconomic policy and elections doi
  21. (1987). M acroeconomic policy in a two-party system as a repeated game,Quarterly doi
  22. (1990). M acroeconomic Policy, Credibility and Politics. Switzerland:
  23. (1992). moves away from strong partisan theory by referring to a trade-off between opportunistic and ideological considerations. This is weak partisan theory.
  24. (1943). Political aspects of full employment, doi
  25. (1992). Political business cycles in the public mind, doi
  26. (1978). Political Control of the Economy. doi
  27. (1992). Political cycles in OECD economies, doi
  28. (1977). Political parties and macroeconomic policy, doi
  29. (1988). Political parties and the business cycle in the United States, 1948-84, doi
  30. (1985). Political parties, world demand and unemployment, doi
  31. (1978). Politico-economic models and cycles, doi
  32. (1997). Politics and the Business Cycle, doi
  33. (1991). Popularity functions based on partisan theory, doi
  34. (1977). Rules Rather than Discretion: The Inconsistency of Optimal Plans, doi
  35. (1983). Rules, Discretion, and Reputation in a doi
  36. (1997). Searching for political business cycles in
  37. (1971). Short-term fluctuations in US voting behaviour, 1896-1964, doi
  38. (1973). Some International Evidence on Output-Inflation Trade-offs, doi
  39. (1981). Some problems in formulating and testing a politico-economic model of the UK, doi
  40. (1975). The effect of aggregate economic variables on congressional elections, doi
  41. (1978). The effect of economic events on votes for president, doi
  42. (1995). The empirical relationship between budgetary deficits and government expenditure growth: An examination using cointegration,
  43. The partisan model of macroeconomic cycles: M ore theory and evidence for the United States, doi
  44. (1975). The political business cycle, doi
  45. (1978). The political business cycle: An empirical test,
  46. (1995). The politics of the political business cycle, doi
  47. (1980). The price of popularity: The political business cycle re-examined, doi
  48. (1994). The quest for political cycles in OECD economies, doi
  49. (1955). The theory of occupational wage differentials,
  50. (1988). The unemployment rate consequences of partisan monetary policies, doi
  51. (1994). The VP-function: A survey of the literature on vote and popularity functions after 25 years, doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.