Political Cycles in OECD Economies

Nouriel Roubini and Alberto Alesina

Scholarly Articles from Harvard University Department of Economics

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 includes 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 cycles" 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 (224)

Published in Review of Economic Studies

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Related works:
Journal Article: Political Cycles in OECD Economies (1992)
Working Paper: Political Cycles in OECD Economies (1990)
Working Paper: Political Cycles in OECD Economies (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:4553025

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