Is There a Political Monetary Business Cycle?

Baruch Mevorach
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Baruch Mevorach: Department of Political Science, Tel Aviv University, Israel

Journal of Interdisciplinary Economics, 1987, vol. 1, issue 4, 215-223

Abstract: This paper provides a political case study explanation to the otherwise pessimistic accounts of the invariance (neutrality) proposition in the rational expectations (ratex) money-output literature. With the assistance of a partisan administration computational “rule†, the anticipated and unanticipated money components are partially separated to allow for consistent partisan anticipated and unanticipated multipliers to exist.Under republican administrations, with a lesser degree of perceived intervention in the economy, money supply is given a more unanticipated interpretation and thus incorporated to a larger degree in the calculations for determining output variance. When Democrats are in control, the larger degree of perceived intervention in the economy is given a more anticipated interpretation, and thus money supply is discounted to a larger degree, when compared with Republican administrations, from the calculations for determining output variance.

Date: 1987
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jinter:v:1:y:1987:i:4:p:215-223

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