Public Choice

, Volume 129, Issue 3–4, pp 249–262 | Cite as

Does the Fed Contribute to a Political Business Cycle?

Article

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.

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Copyright information

© Springer Science+Business Media, Inc. 2006

Authors and Affiliations

  1. 1.University of DelawareNewarkUSA

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