The Political Business Cycle: New Evidence from the Nixon Tapes


  • The paper benefited from helpful comments received in the Workshop in Public Economics at Clemson University and from Saul Hoffman and an anonymous referee of this journal. Any remaining deficiencies are the responsibility of the authors.


Drawing from the personal tape recordings made during the presidency of Richard Nixon, we uncover and report in this paper new evidence that Nixon manipulated Arthur Burns and the Federal Reserve Bank into creating a political business cycle that helped secure Nixon's reelection victory in 1972. Nixon understood the risks that his desired monetary policy imposed but chose to trade longer-term economic costs to the economy for his own short-term political benefit.