Political Cycles and Cyclical Policies. A New Test Approach Using Fiscal ForecastsHenry Ohlsson () and Anders Vredin () No 9, Working Paper Series in Economics and Finance from Stockholm School of Economics Abstract: We test how government revenue and expenditure depend on economic activity, elections, and ideology. We show how the use of fiscal forecasts makes it possible better to understand the determinants of fiscal variables and to separate fiscal policy rules from discretionary policies. The approach is illustrated using a unique, unpublished Swedish data set of fiscal forecasts and forecasts of economic activity. Revenue varies positively with nominal earnings, expenditure varies negatively with real GDP. We find partisan effects, but no political business cycle effects. Revenue and expenditure are lower with non-Social democratic governments. The partisan effect on revenue is stronger than on expenditure. Using another unique data set, we find that there are autonomous decisions behind the reaction of expenditure, but not of revenue, to activity. Keywords: Fiscal forecasts; fiscal policy; policy reaction functions; feedback; autonomous decisions; partisan theories; political business cycles (search for similar items in EconPapers) Published in The Scandinavian Journal of Economics, 1996, pages 203-218 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: http://EconPapers.repec.org/RePEc:hhs:hastef:0009 Access Statistics for this paper More papers in Working Paper Series in Economics and Finance from Stockholm School of Economics |
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