Political Dimensions of the American Macroeconomy, 2nd Edition

CHAPTER 6

Electoral Political Business Cycle

Introduction: Political Business Cycle Effects

The political business cycle (PBC) literature examines electoral, partisan, and other political influences on the macroeconomic policy and the economy. PBC analysis focuses on the issue of presidential manipulation of the macroeconomic policy for political reasons, such as incumbent reelection ambition and partisan economic goals.

The median voter model on the macroeconomy is discussed in Chapter 5. This model asserts that the president supports stabilization policies that move the economy toward the median voter’s macroeconomic preference as a strategy to increase presidential job approval and in-party presidential reelection votes. Two related PBC effects ...