Do political parties foster business cycles? An examination of developed economies

Chang, Koyin; Kim, Yoonbai; Tomljanovich, Marc; Ying, Yung Hsiang

doi:10.1016/j.jce.2012.04.005

Cited by 16 publications

(14 citation statements)

References 54 publications

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“…Rana (2008), Pentecôte, Poutineau, and Rondeau (2013) and Duval et al (2014) show that fiscal policy similarity has an impact on BCS, while Böwer and Guillemineau (2006), Nguyen (2007) and Shin and Wang (2003) find no such relationship. Monetary policy similarity has a significant impact on output comovement in works of some authors (Beck, 2013b;Chang, Kim, Tomaljanovich, & Ying, 2013;Clark & van Wincoop, 2001;Duval et al, 2014), while it is fragile in others (Böwer & Guillemineau, 2006;Pentecôte et al, 2013).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Another strain of literature considers the impact of the exchange rate regime on the correlation of business cycles. Exchange rate variability has a significant impact on BCS in some of the research studies (Chang et al, 2013;Duval et al, 2014;Inklaar et al, 2008;Pentecôte et al, 2013); in others, it depends on the model specification (Akın, 2012;Otto et al, 2001), or is insignificant (Crosby, 2003;Herrero & Ruiz, 2008). The impact of monetary integration on the correlation of business cycles is positive and significant in most of the research (Beck, 2013b;Fidrmuc, 2004;Rose, 2011), yet the variable representing the currency union turns out to be fragile in some papers (Baxter & Kouparitsas, 2005;Böwer & Guillemineau, 2006).…”

Section: Literature Reviewmentioning

confidence: 99%

“…They analyze differences in years of schooling, capital per worker, and arable land, yet they find all these variables fragile. Some authors also explore the role of macroeconomic factors, but these investigations are mostly limited to inflation (Beck, 2014;Chang et al, 2013;Herrero & Ruiz, 2008), technological shocks (Crosby, 2003), and GDP volatility (Kose et al, 2003). Still, other macroeconomic variables remain uninvestigated in the business cycle synchronization literature.…”

Section: Literature Reviewmentioning

confidence: 99%

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What drives business cycle synchronization? BMA results from the European Union

Beck

2019

Baltic Journal of Economics

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The last twenty years have brought a bulk of inconsistent results on the determinants of business cycle synchronization (BCS). Researchers have usually focused their attention on a limited set of possible determinants, not accounting for model uncertainty. For these reasons, Bayesian Model Averaging has been applied in this paper to the dataset with 43 potential determinants of BCS for the EU. There is strong evidence to claim that migration, exchange rate variability, similarity of production structures, TFP shocks, similarity in exchange rate policy, intra-industry trade, risk sharing, and capital mobility are robust determinants of BCS. Some well-established determinants such as bilateral trade, monetary policy similarity, gravity variables, and participation in a monetary union and free trade area have turned out to be fragile. The structure of trade is more important for BCS than its magnitude, as intra-industry trade and structural similarity are taking explanatory power away from the bilateral trade.

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Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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What drives business cycle synchronization? BMA results from the European Union

Beck

2019

Baltic Journal of Economics

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“…In this study, we are motivated by partisan theory. Partisan theory is often applied to analyze party behavior in a closed-economy context (Chang et al, 2013). We insert partisan theory into an open-economy framework, which allows us to consider how an additional, external factor—economic integration—influences parties’ economic positions.…”

Section: Argument and Hypothesesmentioning

confidence: 99%

Economic globalization and the economic policy positions of parties

Sen

Barry

2018

Party Politics

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Does economic globalization influence the economic policy positions adopted by political parties in democratic countries? In this article, we identify multiple pathways through which market integration might induce ideological change among both left and right parties. Utilizing data from 51 countries between 1970 and 2014, we evaluate the degree to which leftist and rightist economic ideologies, respectively, are present in parties’ platforms. We find that traditionally leftist positions are increasingly adopted by parties on both the right and the left in response to globalization. The evidence also suggests that, though there is a general tendency among parties to shift their economic platforms leftward in response to liberalization, there is significant between-country variability in the effects. An important implication of this study is that partisan ideological evolution is not driven solely by domestic forces, but by external factors, too.

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“…They argue that cross-section analysis suggests a positive impact of financial integration on business cycles synchronization, but panel approach reveals the opposite effect. Beck (2013), using multi-equation approach reports intermediate effects of GDP per capita distance trough struc-tural similarity on business cycle synchronization and Chang et al (2013) show the impact of similarities in ruling parties.…”

Section: Literature Reviewmentioning

confidence: 99%

Business cycle synchronization in European Union: regional perspective

Beck¹

2016

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The recent turmoil in the euro area once more forces the EU authorities to reconsider the future of further monetary integration. One of the most commonly used criteria for successful monetary integration in contemporary research is business cycle synchronization (BCS). Though BCS has been vastly described at country level, not as much attention has been paid to the degree of BSC at regional level. The topic is important for two main reasons. Firstly, determining the degree of BCS at the regional level can help in the assessment of monetary policy effectiveness on the country level, as well as give a point of reference for evaluation of prospective costs of participation in a monetary union. Secondly, there is a theoretical dispute within the optimum currency areas literature between the ‘European Commission’ and the ‘Krugman’ view that can be resolved to a large extent trough regional analysis. In order to assess BCS in the EU, Hodrick-Prescott, as well as Christiano and Fitzgerald filter to time series of real GDP for 24 countries, 82 NUTS 1, 242 NUTS 2 and 1264 NUTS 3 regions over the period between 1998 and 2010. The data was later used to create bilateral measures of BSC, which gave 276 observations on the country level, 3321 on NUTS 1, 29161 on NUTS 2 and 798216 on NUTS 3 level. The results of the analysis support the ‘European Commission’ view and show a very high degree of BSC within EU countries. The country level analysis also reveals that within the EU there is a group of countries that could form an effectively working monetary union based on the BCS criterion.

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Do political parties foster business cycles? An examination of developed economies

Cited by 16 publications

References 54 publications

What drives business cycle synchronization? BMA results from the European Union

What drives business cycle synchronization? BMA results from the European Union

Economic globalization and the economic policy positions of parties

Business cycle synchronization in European Union: regional perspective

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