Macroeconomic Policy and Elections in OECD Democracies

56 Pages Posted: 9 Jun 2004

See all articles by Alberto F. Alesina

Alberto F. Alesina

Harvard University - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Gerald D. Cohen

Ziff Brothers Investments - Macro Strategy; National Bureau of Economic Research (NBER)

Nouriel Roubini

New York University - Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 1991

Abstract

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.

Suggested Citation

Alesina, Alberto F. and Cohen, Gerald D. and Roubini, Nouriel, Macroeconomic Policy and Elections in OECD Democracies (September 1991). NBER Working Paper No. w3830. Available at SSRN: https://ssrn.com/abstract=226727

Alberto F. Alesina (Contact Author)

Harvard University - Department of Economics ( email )

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Gerald D. Cohen

Ziff Brothers Investments - Macro Strategy ( email )

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Nouriel Roubini

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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