Variable Rational Partisan Business Cycles: theory and some evidence

Jac Heckelman

Canadian Journal of Economics, 2002, vol. 35, issue 3, 568-585

Abstract: The Variable Rational Partisan Business Cycle model is developed, where agents face uncertainty regarding the timing and outcome of the next election. The model predicts that partisan influences on the economy persist throughout the government's rule and are further influenced, in the opposite direction, by which party ruled in the previous period. Party popularity also has a causal effect on the business cycle. Finally, the effects from changes in election timing expectations are dependent on which party ruled in the previous period. Empirical results for output and unemployment in Canada, Germany, and United Kingdom yield mixed support for the model.

JEL-codes: D72 E32 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (8)

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