In this paper we study the link between elections, fiscal policy and aggregate fluctuations. The set-up is a stylized dynamic stochastic general equilibrium model incorporating both technology and political re-election shocks. The later are incorporated via a two-party model with elections. The...

The literature on electoral cycles has developed in two distinct phases. The first one considered the existence of non-rational (naive) voters whereas the second one considered fully rational voters. In our perspective, an intermediate approach is more interesting, i.e. one that considers...

This paper provides a theoretical model of pre-electoral budget cycle and tests its empirical implications. Whenelections approach, incumbent policy-makers have an incentive to signal their competency by acting on economicvariables. Rational voters incorporate the knowledge of such mechanisms in...

We analyze the interaction of stock market movements and politics in Germany. In contrast to the empirical evidence available for the U.S., we do not find that German stock market returns tend to be higher during liberal than during conservative governments. Also in contrast to results for the...

The phenomena of manipulation of the economy by the incumbent for electoral purpose are called Political Business Cycles (PBC), introduced by Nordhaus (1975). Using policy control economic instruments, as fiscal and monetary instruments, government may manipulate the economy to gain electoral...

This paper provides a comprehensive theoretical model of the political decision making process. Therein two ideologically different political parties compete for power. Their primary instrument in this competition are programmatic concessions in favor of voters and interest groups. As any...

Previous studies found the introduction of the today well established media radio and television to affect political participation. This paper evaluates the effect of the relatively recent introduction of a new medium, broadband internet. OLS resultssuggest a positive association between DSL...