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Is the political business cycle for real?

Stephen Blomberg () and Gregory Hess ()

No 16, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: This paper's macroeconomic model combines features from both real and political business cycle models. It augments a standard real business cycle tax model by allowing for varying levels of government partisanship and competence in order to replicate two important empirical regularities: First, that on average the economy expands early under Democratic presidents and contracts early under Republican presidents. Second, that presidents whose parties successfully retain the presidency have stronger-than-average growth in the second half of their terms. The model generates both of these features in conformity with U.S. post-World War II data.

Keywords: Business; cycles (search for similar items in EconPapers)
Date: 2000, Revised 2000
New Economics Papers: this item is included in nep-dge, nep-pbe and nep-pol
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Journal Article: Is the political business cycle for real? (2003) Downloads
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