Political Dimensions of the American Macroeconomy, 2nd Edition

CHAPTER 7

Partisan Political Business Cycle

Introduction

The last chapter focused on the electoral cycle. This chapter examines the partisan cycle (e.g., Hibbs 1982). The president supports policies that attain partisan macroeconomic goals according to the partisan model. Two contrasting partisan effects take place based on which political party occupies the White House. A liberal partisan effect occurs during Democratic incumbencies. A conservative partisan cycle occurs during Republican presidencies.

The president’s policy preference deviates from the median voter’s most preferred outcome in the partisan model. Presidents adopt the partisan macroeconomic agenda of their core constituencies. This result occurs because of political party dependency ...