Unemployment and Inflation Consequences of Unexpected Election Results

Authors


  • The authors are grateful for useful comments from Peren Arin, Ansgar Belke, Helge Berger, Marcel Thum, as well as an anonymous referee. We also wish to thank Jon Coll for providing his database of Irish opinion polls. The usual disclaimer applies.

Abstract

The empirical evidence toward rational partisan theory of business cycles is mixed and thus inconclusive. This is due to the enormous heterogeneity of the existing empirical studies. Only a few of these test explicitly for the central theoretical innovation that post-electoral blips in economic activity depend on the degree of the electoral surprise. Using polling data we present empirical evidence in favor of rational partisan theory for a panel of OECD countries.

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