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Political Cycles in OECD Economies

Alberto Alesina and Nouriel Roubini

The Review of Economic Studies, 1992, vol. 59, issue 4, 663-688

Abstract: This paper studies whether the dynamic behaviour of GNP growth, unemployment and inflation is systematically affected by the timing of elections and of changes of governments. The sample include the last three decades in 18 OECD economies. We explicitly test the implication of several models of political cycles, both of the "opportunistic" and of the "partisan" type. Also, we confront the implication of recent "rational" models with more traditional approaches. Our results can be summarized as follows: (a) The "political business cycle" hypothesis, as formulated in Nordhaus (1975) on output and unemployment is generally rejected by the data; (b) inflation tends to increase immediately after elections, perhaps as a result of pre-electoral expansionary monetary and fiscal policies; (c) we find evidence of temporary partisan differences in output and unemployment and of long-run partisan differences in the inflation rate as implied by the "rational partisan theory" by Alesina (1987); (d) we find virtually no evidence of permanent partisan differences in output growth and unemployment.

Date: 1992
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Citations: View citations in EconPapers (231)

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Working Paper: Political Cycles in OECD Economies (1992) Downloads
Working Paper: Political Cycles in OECD Economies (1990) Downloads
Working Paper: Political Cycles in OECD Economies (1990) Downloads
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The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

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