Advertisement

Political Business Cycles

  • Thomas D. Willett
  • Manfred W. Keil

Abstract

Few concepts in political economy are more widely known than the political business cycle (PBC). Nor have many given rise to such heated debate among scholars. The extent of debate reflects the highly mixed empirical evidence that has been found, but the heat of the debate has come largely from the challenge to the economists’ favorite assumption — rationality — posed by traditional formulations of the political business cycle theory. This in turn follows from the roles of macroeconomists and political scientists in the early contributions to political business cycle analysis. (For discussions of these see Drazen, 2000; Keech, 1995; Paldam, 1997).

Keywords

Exchange Rate Monetary Policy Public Choice Rational Expectation Macroeconomic Policy 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Alesina, A. (1988). “Macroeconomics and politics,” in O. Blanchard and S. Fischer (eds.) NBER Macroeconomics Annual. Cambridge, MA: MIT Press.Google Scholar
  2. Alesina, A., Roubini, N., and Cohen, G. (1997). Political Cycles and the Macroeconomy. Cambridge, MA: MIT Press.Google Scholar
  3. Bachman, D. (1992). “The effect of political risk on the forward exchange bias: the case of elections.” Journal of International Money and Finance, 11: 208–219.CrossRefGoogle Scholar
  4. Bernhard, W. and Leblang, D. (2002). “Democratic processes and political risk: evidence from foreign exchange markets.” American Journal of Political Science, 46: 316–333.CrossRefGoogle Scholar
  5. Blomberg, S. and Hess, G. (1997). “Politics and exchange rate forecasts.” The Journal of International Economics, August: pp. 189–205.Google Scholar
  6. Blomberg, S. and Hess, G. (2002). “Is the political business cycle for real?” Journal of Public Economics, forthcoming.Google Scholar
  7. Blomberg, S., Frieden, J., and Stein, E. (2002). “Sustaining fixed rates: the political economy of currency pegs in Latin America,” Working Paper.Google Scholar
  8. Boddy, R. and Crotty, J. (1975). “Class conflict and Macro-policy: the political business cycle.” Review of Radical Political Economy, 1–19.Google Scholar
  9. Buchanan, J. and Wagner, R. (1977). Democracy in Deficit: The Political Legacy of Lord Keynes. New York: Academic Press.Google Scholar
  10. Dornbusch, R. (2001). “Fewer monies, better monies.” American Economic Review, May: 238–247.Google Scholar
  11. Drazen, A. (2000). Political Economy in Macroeconomics. Princeton: Princeton University Press.Google Scholar
  12. Fair, R. (1978). “The effect of economic events on votes for President.” Review of Economics and Statistics, 159–173.Google Scholar
  13. Fair, R. (1996). “Econometrics and presidential elections.” Journal of Economic Perspectives, 89–102.Google Scholar
  14. Fair, R. (2000). “Actual outcome — November 2000,” Mimeo, Yale University.Google Scholar
  15. Feiwel, G. (1974). “Reflections on Kalecki’s theory of political business cycle.” Kyklos, 21–47.Google Scholar
  16. Frieden, J. and Stein, E. (eds.) (2001). The Currency Game: Exchange Rate Politics in Latin America. Washington, D.C.: Inter-American Development Bank.Google Scholar
  17. Frey, B. and Schneider, F. (1978). “An empirical study of politico-economic interaction in the U.S.” Review of Economics and Statistics, 174–183.Google Scholar
  18. Friedman, M. (1968). “The role of monetary policy.” American Economic Review, 1–17.Google Scholar
  19. Friedman, M. (1970). The Optimum Quantity Theory of Money and Other Essays. Chicago: Chicago University Press.Google Scholar
  20. Hibbs, D. (1987). The American Political Economy: Macroeconomics and Electoral Politics in the United States. Cambridge, MA: Harvard University Press.Google Scholar
  21. Kalecki, M. (1943). “Political aspects of full employment.” Political Quarterly, 322–331.Google Scholar
  22. Keech, W. (1995). Economic Politics: The Costs of Democracy. Cambridge: Cambridge University Press.Google Scholar
  23. Laney, L. and Willett, T. (1983). “Presidential Politics, Budget Deficits, and Monetary Policy in the United States: 1960–1976.” Public Choice, 53–69.Google Scholar
  24. Lewis-Beck, M. (1988). Economics and Elections. Ann Arbor: University of Michigan Press.Google Scholar
  25. Lobo, B. and Tufte, D. (1998). “Exchange rate volatility: does politics matter?” Journal of Macroeconomics, 20: 351–365.CrossRefGoogle Scholar
  26. MacKuen, M., Erikson, R., and Simson, J. (1992). “Peasants or Bankers? The American Electorate and the U.S. Economy.” American Political Science Review. 597–611.Google Scholar
  27. MacRae, D. (1977). “A political model of the business cycle.” Journal of political economy, 239–263.Google Scholar
  28. Nannestad, P. and Paldam, M. (1994). “The VP-function. A survey of the literature on vote and popularity functions.” Public Choice, 213–245.Google Scholar
  29. Minford, P. and Peel, D. (1982). “The political theory of the business cycle.” European Economic Review, 253–270.Google Scholar
  30. Nordhaus, W. (1975). “The political business cycle.” Review of Economic Studies, 169–190.Google Scholar
  31. Nordhaus, W. (1989). “Alternative approaches to the political business cycle.” Brookings Papers on Economic Activity, 2: 1–68.CrossRefGoogle Scholar
  32. Norpoth, H. (1996). “Presidents and the prospective voter.” Journal of Politics, 776–792.Google Scholar
  33. Paldam, M. (1997). “Political business cycles,” in Dennis Mueller (ed.) Perspectives on Public Choice. Cambridge: Cambridge University Press.Google Scholar
  34. Persson, T. and Tabellini, G. (2000). Political Economics: Explaining Economic Policy. Cambridge, MA: The MIT Press.Google Scholar
  35. Pissarides, C. (1980). “British Government popularity and economic performance.” Economic Journal, 569–581.Google Scholar
  36. Remmer, K. (1993). “The political economy of elections in Latin America, 1980–1991.” American Political Science Review, 87(2)(June): 393–407.CrossRefGoogle Scholar
  37. Rogoff, K., and Sibert, A. (1988). “Elections and macroeconomic policy cycles.” Review of Economic Studies, 1–16.Google Scholar
  38. Sherman, H. (1979). “A Marxist theory of the business cycle.” Review of Radical Political Economy, 1–23.Google Scholar
  39. Shi, M. and Svensson, J. (2000). “Conditional Political Business Cycles.” Harvard University and Institute for International Economic Studies, Stockholm University, processed.Google Scholar
  40. Shugart, W. and Tollison, J. (1985). “Legislation and political business cycles.” Kyklos, 43–59.Google Scholar
  41. Tufte, E. (1978). Political Control of the Economy. Princeton: Princeton University Press.Google Scholar
  42. Willett, T. (ed.) (1988). Political Business Cycles: The Political Economy of Money, Inflation, and Unemployment. Durham, N.C.: Duke University Press for the Pacific Research Institute.Google Scholar
  43. Willett, T. (1990). “Studying the fed: towards a broader Public choice perspective,” in Thomas Mayer (ed.) The Political Economy of American Monetary Policy. Cambridge: Cambridge University Press.Google Scholar
  44. Willet, T. (2001). “The political economy of external discipline: constraint versus incentive effects of capital mobility and exchange rate pegs,” prepared for delivery at the 2001 Annual Meeting of the American Political Science Association, San Francisco, August 30–September 2, 2001.Google Scholar
  45. Willett, T. and Mullen, J. (1982). “The Effects of Alternative International Monetary Systems on Inflationary Biases and Macroeconomic Discipline,” in Raymond E. Lombra and Willard E. Witte (eds.) Political Economy of International and Domestic Monetary Relations. Ames, Iowa: Iowa State University Press, pp. 143–155.Google Scholar
  46. Woodward, B. (2000). Maestro. New York: Simon and Schuster.Google Scholar

Copyright information

© Kluwer Academic Publishers 2004

Authors and Affiliations

  • Thomas D. Willett
  • Manfred W. Keil

There are no affiliations available

Personalised recommendations