Pakistan, Politics and Political Business Cycles

Gernot Sieg and Irem Batool
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Irem Batool: COMSATS Institute of Information Technology, Sahiwal

The Pakistan Development Review, 2012, vol. 51, issue 2, 153-166

Abstract: This paper studies whether in Pakistan the dynamic behaviour of unemployment, inflation, budget deficit and real GDP growth is systematically affected by the timing of elections. We cover the period from 1973-2009. Our results can be summarised as follows: (1) Unemployment tends to be lower in pre-election periods and tends to increase immediately after elections, perhaps as a result of politically motivated employment schemes. (2) Inflation tends to be lower in pre-election periods, perhaps as a result of pre-electoral price regulation. (3) We find increase in the governmental budget deficit, financed by heavy government borrowings from the central bank and banking sector during election year. (4) Real GDP growth and real governmental investment growth declines during pre and post election terms possibly as a result of inefficient resource allocation.

Keywords: Opportunistic Political Business Cycle; Fiscal Policy; Macro-economics; Elections; Pakistan (search for similar items in EconPapers)
JEL-codes: D72 D78 E51 H50 H61 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Pakistan, politics and political business cycles (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pid:journl:v:51:y:2012:i:2:p:153-166

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