Political Business Cycles in the Parliamentary Systems: Evidence from Turkey

Funda Telatar ()

Emerging Markets Finance and Trade, 2003, vol. 39, issue 4, 24-39

Abstract: This paper empirically investigates the existence of political business cycles in Turkey for the 1986-97 period. Turkey presents an interesting case, with high and chronic inflation problems continuing since the mid-1970s. Political surfing and manipulative hypotheses about the behavior of the governments in a parliamentary system are tested by using probit and logit estimation procedures that include the election timing as an endogenous variable. We found that the governments manipulated the economy to increase their chances to be reelected through money supply and government expenditures during the sample period, causing the stabilization programs to loose their credibility and thus the inflation problem to continue.

Keywords: credibility; inflation; political business cycles (search for similar items in EconPapers)
Date: 2003
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