Public Choice

, Volume 129, Issue 3, pp 249–262

Does the Fed Contribute to a Political Business Cycle?

Authors

    • University of Delaware
  • Plamen Iossifov
    • University of Delaware
Article

DOI: 10.1007/s11127-006-9017-0

Cite this article as:
Abrams, B.A. & Iossifov, P. Public Choice (2006) 129: 249. doi:10.1007/s11127-006-9017-0

Abstract

In contrast to findings of other studies, evidence is presented to support the existence of a Federal Reserve-induced political monetary cycle that corresponds to the U.S. presidential election cycle. Using various Taylor rules, we find support for the view that Fed policy turns significantly more expansionary in the seven quarters prior to the election, but only when the Fed chair and incumbent presidential party have partisan affiliations.

Copyright information

© Springer Science+Business Media, Inc. 2006