Other Political Business Cycle Considerations
Chapters 6, 7, and 8 examined some of the theoretical and empirical characteristics of the electoral and partisan PBC effects. This chapter looks at some additional issues regarding political influence on macroeconomic policy and the economy. We will consider in more detail the main assumptions of the electoral and partisan effects. We will also discuss macroeconomic uncertainty and its influence on election outcomes. Finally, we will examine the subject of central bank independence and the related topic of a monetary policy rule.
Main Assumptions of the Electoral and Partisan Effects
Three key assumptions underlie the electoral and partisan cycle effects:
- •President’s Policy Preference: ...
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