Which Type of Central Bank Smooths the Political Business Cycle?
This paper develops a dynamic model of Rational Partisan Business Cycles, wherein wage contracts overlap elections and wage setters have to make a prediction about the election result. Uncertainty leads to pre- and post-election date output fluctuations. Election result probabilities are imputed and then used to construct variables in electoral uncertainty. Using data from 20 OECD countries over the period 1960-1998 left wing incumbents are found to increase output, but the increased expectation of a left wing regime reduces it. These political effects are found to be offset by Central Bank Independence and in particular, objective independence.
Year of publication: |
2002-08-29
|
---|---|
Authors: | Maloney, John ; Pickering, Andrew ; Hadri, Kaddour |
Institutions: | Royal Economic Society - RES |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Which type of central bank smooths the political business cycle?
Maloney, John, (2001)
-
Political business cycles and central bank independence
Maloney, John, (2003)
-
The oil extraction puzzle: theory and evidence
Pickering, Andrew, (2003)
- More ...