Political Cycles and the Macroeconomy

Acknowledgments xi Overview 1(14) Organization of the Book 8(3) How Does This Book Relate to Previous Research? 11(2) Technical Level of This Book 13(2) Opportunistic Models 15(30) Introduction 15(2) The Traditional Opportunistic Model: The Political Business Cycle 17(5) Rational Opportunistic Models 22(11) Rational Retrospective Voting 33(3) Conclusions 36(9) Appendix 37(8) Partisan Models 45(22) Introduction 45(1) The Traditional Partisan Model 46(5) The Rational Partisan Model 51(6) Welfare Properties of Partisan Cycles 57(2) A Rational Partisan Model with Retrospective Voting 59(2) Discussion and Conclusions 61(6) Appendix 64(3) Political Cycles in the United States 67(44) Introduction 67(3) Previous Empirical Results 70(3) Data and Basic Statistics 73(9) Specification of the Empirical Tests 82(1) Evidence on the Partisan Theories 83(10) Evidence on Political Business Cycles 93(2) Political Cycles in Monetary Policy 95(7) Political Cycles in Fiscal Policy 102(5) Discussion: Alternative Hypotheses 107(1) Conclusions 108(3) Appendix 109(2) Polls, Electoral Uncertainty, and the Economy 111(30) Introduction 111(1) The Electoral Option and Its Application to Models of Partisan Politics 112(12) Political Information and Financial Markets: An Overview 124(10) Conclusion 134(7) Appendix A 135(2) Appendix B 137(2) Appendix C 139(2) Political Cycles in Industrial Economies 141(44) Introduction 141(2) Previous Empirical Results 143(2) Data and Specification of Empirical Tests 145(3) Evidence on the Rational Partisan Theory 148(15) Traditional Partisan Theory 163(3) Level versus Growth Effects 166(1) Evidence on Political Business Cycles 167(3) Endogenous Elections and Opportunistic Policy-makers 170(3) Conclusions 173(12) Appendix 174(11) Political Cycles and Macroeconomic Policies: Evidence from Industrial Democracies 185(26) Introduction 185(1) Data and Specification of Empirical Tests for Monetary Policy 186(2) Evidence on Partisan Effects in Monetary Policy 188(8) Evidence on Political Business Cycle Effects in Monetary Policy 196(5) Electoral and Partisan Determinants of Fiscal Policy and Budget Deficits 201(6) Conclusions 207(4) Appendix 208(3) Political Cycles and Central Bank Independence 211(16) Introduction 211(2) Independent Central Banks 213(5) Political Cycles and Central Bank Independence 218(5) A Note on the ``Contracting'' Approach 223(1) Conclusions 224(3) Appendix 225(2) Political Parties, Institutions, and Budget Deficits 227(26) Introduction 230(10) Political Models of Budget Deficits 240(5) Opportunistic and Partisan Effects on Fiscal Policy Revisited 245(2) Normative Implications 247(1) Conclusions 248(5) Appendix 250(3) Conclusions 253(12) Summary of Results 253(6) Are Political Cycles Going to Disappear? 259(6) Notes 265(20) References 285(12) Index 297