Resource title

Electoral uncertainty, fiscal policy and macroeconomic fluctuations

Resource image

image for OpenScout resource :: Electoral uncertainty, fiscal policy and macroeconomic fluctuations

Resource description

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 main theoretical prediction is that forward-looking incumbents, with uncertain prospects of re-election, find it optimal to follow relatively shortsighted fiscal policies, and that this hurts capital accumulation. Our econometric estimation, using U.S. data, finds a statistically significant link between electoral uncertainty and policy instruments and in turn macroeconomic outcomes.

Resource author

Jim Malley, Apostolis Philippopoulos, Ulrich Woitek

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/19057

Resource license

Adapt according to the presented license agreement and reference the original author.