Partisan Conflicts and Parliamentary Dominance: The Norwegian Political Business Cycle

Abstract

The arcticle explores the political business cycle in Norway from the early 1980s onwards. It is shown that unemployment growth is related to uncertainty about likely parliamentary majorities, and to the level of political conflict between such majorities. Data indicate that voter expectations are formed on the basis of likely majority winners in votes, not in seats. Unemployment growth is unrelated to sudden and unpredictable changes in the composition of government. This suggests that the instruments influencing unemployment growth are within the domain of the legislative, not the executive, power.

Keywords: Political Business Cycles, Parliamentary Majorities

JEL Classification: E72,H30