A MODEL OF AN OPPORTUNISTIC-PARTISAN POLITICAL BUSINESS CYCLE

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ABSTRACT

According to political business cycle theory, separate opportunistic and partisan approaches exist. It is obvious, as seen from theoretical and empirical points of view, that politicians aim for both opportunistic as well as partisan goals. This paper presents a model of a pre-election political business cycle that manifests an indication of competence and a post-election political business cycle that occurs because of the uncertainty of an election's winner monetary policy. In the pre-election period competent governments expand the economy. The post-election cycle depends on whether a leftist or a conservative government is in power in the pre-election period, and if they are re-elected or not.

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