Macroeconomic Policy and Elections in OECD Democracies

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Macroeconomic Policy and Elections in OECD Democracies

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Title: Macroeconomic Policy and Elections in OECD Democracies
Author: Roubini, Nouriel; Cohen, Gerald; Alesina, Alberto

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Citation: Alesina, Alberto, Gerald D. Cohen, and Nouriel Roubini. 1992. Macroeconomic policy and elections in OECD democracies. Economics & Politics 4(1): 1-30.
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Abstract: The purpose of this paper is to test for evidence of opportunistic "political business cycles" in a large sample of 18 OECD economies. Our results can be summarized as follows: 1) We find very little evidence of pre-electoral effects on economic outcomes, in particular, on GDP growth and unemployment; 2) We see some evidence of "political monetary cycles," that is, expansionary monetary policy in election years; 3) We also observe indications of "political budget cycles," or "loose" fiscal policy prior to elections; 4) Inflation exhibits a post-electoral jump, which could be explained by either the pre-electoral "loose" monetary and fiscal policies and/or by an opportunistic timing of increases in publicly controlled prices, or indirect taxes.
Published Version: doi:10.1111/j.1468-0343.1992.tb00052.x
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