NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Macroeconomic Policy and Elections in OECD Democracies

Alberto Alesina, Gerald D. Cohen, Nouriel Roubini

NBER Working Paper No. 3830
Issued in September 1991
NBER Program(s):   ME

The purpose of this paper is to test for evidence of opportunistic "political business cycles" in a large sample of 18 OECD economies. Our results can be summarized as follows: 1) We find very little evidence of pre-electoral effects of economic outcomes, in particular, on GDP growth and unemployment; 2) We see some evidence of "political monetary cycles." that is, expansionary monetary policy in election years; 3) We also observe indications of "political budget cycles," or "loose" fiscal policy prior to elections; 4) Inflation exhibits a postelectoral jump, which could be explained by either the preelectoral "loose" monetary and fiscal policies and/or by an opportunistic timing of increases in publicly controlled prices, or indirect taxes.

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Document Object Identifier (DOI): 10.3386/w3830

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