This paper shows that the 'Frey-Schneider-Schultz hypothesis'--that there is a negative relation between the government's popularity and the government's incentives to engineer political business cycles--is consistent with rational, forward-looking voting provided one makes appropriate...

The authors formulate a simple model of the interaction between a sponsor and a bureau. The sponsor sets the bureau's budget while the bureau decides on how much to spend on slack. The authors compute numerically Markov perfect equilibria of multiperiod games where the agents move alternately...