Electoral Incentives, Political Business Cycles and Macroeconomic Performance : empirical evidence from post-war US personal income growth
By: KRAUSE, George A
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Material type: 
ArticlePublisher: Cambridge : Cambridge University Press, January 2005British Journal of Political Science 35, 1, p. 77-101Abstract: Conventional wisdom suggests that macroeconomic outcomes do not follow a political business cycle (PBC) pattern. In this study, the nature of the electoral underpinnings of such opportunistic behavior are investigated by analysing alternative formulations of PBC theory: (1) a naive-unconditional PBC, (2) and electoral security-conditional PBC, (3) and electoral uncertainty-conditional PBC; and (4) a partisan-conditional PBC. Data on the US real personal income growth rate for the 1948:1-2000:4 quartely period reveals support for both naive-unditional and partisan-conditional PBCs, yet rejects an electoral cycle attributable to the incumbent administration's ex ante re-election prospects. Simulation analysis reveals that while Democratic administrations enjoy higher income growth than Republican counterparts for non pre-election economic expansions than Democratic presidents consistent with a partisan-conditional PBC theoretical model. This finding supports the notion that incumbent governments engage in partisan-based policy balancing with respect to the creation of opportunistic electoral cycles in real macroeconomic activity. On a broader level, these atatistical findings provide strong support for adaptive models of the electoral cycle taht emphasize partisan differences while refuting the policy neutrality proposition and rational-competence models predicated on the extent to wich an incumbent administration experiences electoral vulnerability
Conventional wisdom suggests that macroeconomic outcomes do not follow a political business cycle (PBC) pattern. In this study, the nature of the electoral underpinnings of such opportunistic behavior are investigated by analysing alternative formulations of PBC theory: (1) a naive-unconditional PBC, (2) and electoral security-conditional PBC, (3) and electoral uncertainty-conditional PBC; and (4) a partisan-conditional PBC. Data on the US real personal income growth rate for the 1948:1-2000:4 quartely period reveals support for both naive-unditional and partisan-conditional PBCs, yet rejects an electoral cycle attributable to the incumbent administration's ex ante re-election prospects. Simulation analysis reveals that while Democratic administrations enjoy higher income growth than Republican counterparts for non pre-election economic expansions than Democratic presidents consistent with a partisan-conditional PBC theoretical model. This finding supports the notion that incumbent governments engage in partisan-based policy balancing with respect to the creation of opportunistic electoral cycles in real macroeconomic activity. On a broader level, these atatistical findings provide strong support for adaptive models of the electoral cycle taht emphasize partisan differences while refuting the policy neutrality proposition and rational-competence models predicated on the extent to wich an incumbent administration experiences electoral vulnerability
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