A model of partisan central banks and opportunistic political business cycles

Sieg, Gernot

doi:10.1016/s0176-2680(97)00019-0

Cited by 37 publications

(18 citation statements)

References 16 publications

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“…For reviews, see Alt & Chrystal (1983) and Willett (1988). 2 Add to these Cukierman & Meltzer (1986), Nordhaus (1989), Terrones (1989), Ellis & Thoma (1991a,b, 1995, Alesina & Roubini (1992), Alesina et al (1992Alesina et al ( , 1993aAlesina et al ( , 1997, Garfinkel & Glazer (1994), Alesina & Rosenthal (1995), Sieg (1997), Lohmann (1998Lohmann ( , 1999, Carlsen & Pedersen (1999), Faust & Irons (1999), Gonzalez (1999aGonzalez ( ,b, 2000, Cusack (2000), and Heckelman (2001). For reviews, see Paldam (1997), Gärtner (2000), Persson & Tabellini (1990, 1994, Drazen (2000Drazen ( , 2001, and Olters (2001).…”

Section: Introductionmentioning

confidence: 99%

ELECTORAL ANDPARTISANCYCLES INECONOMICPOLICIES ANDOUTCOMES

Franzese

2002

Annu. Rev. Polit. Sci.

340

224

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Key Words political business cycles, electioneering, partisan theory, political economy s Abstract Policy makers in democracies have strong partisan and electoral incentives regarding the amount, nature, and timing of economic-policy activity. Given these incentives, many observers expected government control of effective economic policies to induce clear economic-outcome cycles that track the electoral calendar in timing and incumbent partisanship in character. Empirics, however, typically revealed stronger evidence of partisan than of electoral shifts in real economic performance and stronger and more persistent electoral and partisan shifts in certain fiscal, monetary, and other policies than in real outcomes. Later political-economic general-equilibrium approaches incorporated rational expectations into citizens' and policy makers' economic and political behavior to explain much of this empirical pattern, yet critical anomalies and insufficiencies remain. Moreover, until recently, both rational-and adaptiveexpectations electoral-and-partisan-cycle work underemphasized crucial variation in the contexts-international and domestic, political and economic, institutional, structural, and strategic-in which elected partisan incumbents make policy. This contextual variation conditions policy-maker incentives and abilities to manipulate economic policy for electoral and partisan gain, as well as the effectiveness of such manipulation, differently across democracies, elections, and policies. Although relatively new, research into such context-conditional electoral and partisan cycles seems to offer much promise for resolving anomalies and an ideal substantive venue for theoretical and empirical advancement in the study of political economy and comparative democratic politics more generally.

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Section: Introductionmentioning

confidence: 99%

ELECTORAL ANDPARTISANCYCLES INECONOMICPOLICIES ANDOUTCOMES

Franzese

2002

Annu. Rev. Polit. Sci.

340

224

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“…October 29, 19901989-90 General Elections 1993October 6, 19931992-93 General Elections 1997February 3, 19971996-1997General Elections 2002October 10, 20022001-2002General Elections 2008February 18, 20082007-2008 16 …”

Section: Appendix Unit Root Test Resultsmentioning

confidence: 99%

Pakistan, Politics and Political Business Cycles

Batool¹,

Sieg

2022

pdr

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This paper studies whether in Pakistan the dynamic behavior of real GDP growth, unemployment and inflation is systematically affected by the timing of elections. We cover the period from 1973-2009.Our results can be summarized as follows: 1. Unemployment tends to be lower in pre-election periods and tend to increase immediately after elections, perhaps as a result of politically motivated employment schemes. 2. Inflation tend to be lower in pre-election periods and tend to increase immediately after elections, perhaps as a result of pre-electoral price regulation and fiscal policies. 3. We find election year increases in the governmental budget deficit. 4. Real GDP growth is not affected by the timing of elections.

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“…There are other strands of research on political business cycles that I think would be interesting to re-visit with hyperbolic discounting, such as models with political-partisan competition (e.g., Hibbs 1977Hibbs , 1992Alesina and Rosenthal 1995) and political budget cycles (e.g., Aidt, Veiga, and Veiga 2011;Efthyvoulou 2012;Klomp and de Haan 2013;Foremny and Riedel 2014;Shelton 2014). It would also be very interesting to re-visit the literature on rational (opportunistic and partisan) political business cycles (e.g., Alesina 1987;Rogo¤ 1990;Sieg 1997Sieg , 2001Sieg , 2006Aidt, Veiga, and Veiga 2011) and explore how the predictions of such models might change under the alternative assumption of forward-looking hyperbolic discounting à la Strotz (1956) and Laibson (1997Laibson ( , 1998. Lastly, it would be of interest to see how the predicted political business cycle and the timing of elections might be a¤ected by hyperbolic discounting if the date of re-election is a choice variable of the incumbent (Chappell and Peel 1979;Lächler 1982).…”

Section: Discussionmentioning

confidence: 99%

Hyperbolic memory discounting and the political business cycle

Findley

2015

European Journal of Political Economy

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The vintage political business cycle framework of Nordhaus (1975) represents the idea that the macroeconomic business cycle is manipulated opportunistically by an incumbent government to achieve re-election. A key assumption in this prototypical framework is that voters discount their memories about unemployment and in ‡ation at a constant rate. Yet starting with Ebbinghaus (1885) and Jost (1897), a large body of research in psychology documents an empirical regularity that has come to be known as Jost's Second Law of Forgetting-individuals discount recent memories at a higher rate compared to the rate at which they discount older memories. I …nd that incorporating this insight from psychology (i.e., hyperbolic memory discounting) into the benchmark framework moderates the amplitude of the predicted political business cycle.JEL classi…cation: D03; D72

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A model of partisan central banks and opportunistic political business cycles

Cited by 37 publications

References 16 publications

ELECTORAL ANDPARTISANCYCLES INECONOMICPOLICIES ANDOUTCOMES

ELECTORAL ANDPARTISANCYCLES INECONOMICPOLICIES ANDOUTCOMES

Pakistan, Politics and Political Business Cycles

Hyperbolic memory discounting and the political business cycle

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