Public Choice

, Volume 92, Issue 3, pp 407–427

Political business cycles and macroeconomic credibility: a survey

  • Simon Price
Article

DOI: 10.1023/A:1004937830968

Cite this article as:
Price, S. Public Choice (1997) 92: 407. doi:10.1023/A:1004937830968

Abstract

There is clear evidence that government popularity and election performance is affected, in part, by economic performance, suggesting that governments may manipulate the economy to political advantage. Simple models incorporating adaptive expectations which allowed the government to exploit this relationship were developed in the 1970s, but fell out of fashion with the advent of new-classical economics. However, modern theories of the political business cycle, which are closely related to the macroeconomic policy game literature, assume rational expectations, and lead to forms of political business cycle, driven by the existence of uncertainty of one type or another. The international evidence suggests that some aspects of the theories apply, although definitive conclusions are – as we might expect – hard to come by.

Copyright information

© Kluwer Academic Publishers 1997

Authors and Affiliations

  • Simon Price
    • 1
  1. 1.Department of EconomicsCity UniversityLondonU.K

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