Elections and macroeconomic policy cycles

There is an extensive empirical literature on political business cycles, but its theoretical foundations are grounded in pre-rational expectations macroeconomic theory. Here we show that electoral cycles in taxes, government spending and money growth can be modeled as an equilibrium signaling proces...

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Bibliographic Details
Main Authors: Rogoff, Kenneth, Sibert, Anne
Format: Book
Published: Clevedon Society for Economic Analysis January 1988
Series:Review of Economic Studies n. 181
Subjects:

MARC

LEADER 00000nam a2200000 a 4500
082 |a H 76725 n. 181, 1988 
090 |c 20336  |d 20336 
100 |a Rogoff, Kenneth 
100 |a Sibert, Anne 
245 |a Elections and macroeconomic policy cycles 
260 |b Society for Economic Analysis 
260 |a Clevedon 
260 |c January 1988 
300 |a pp. 1-16  |b il. 
490 |a Review of Economic Studies  |v n. 181  |x 00346527 
504 |a Incluye bibliografía 
520 |a There is an extensive empirical literature on political business cycles, but its theoretical foundations are grounded in pre-rational expectations macroeconomic theory. Here we show that electoral cycles in taxes, government spending and money growth can be modeled as an equilibrium signaling process. The cycle is driven by temporary information asymmetries which can arise if, for example, the government has more current information on its performance in providing for national defence. Incumbents cheat least when their private information is either extremely favourable or extremely unfavourable. An exogeneous increase in the incumbent party's popularity does not necessarily imply a damped policy cycle.  
650 |a CICLOS ECONOMICOS  
650 |a MACROECONOMIA  
650 |a ASPECTOS ECONOMICOS 
942 |c ANAR  |j H 76725 n. 181, 1988 
999 |c 20287  |d 20287