The Federal Reserve and the Electoral Cycle

UNCG Author/Contributor (non-UNCG co-authors, if there are any, appear on document)
Stuart D. Allen, Professor (Creator)
The University of North Carolina at Greensboro (UNCG )
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Abstract: Economic forecasts for a presidential election year always consider the alleged existence of an electoral cycle that is orchestrated by vote-maximizing incumbents to ensure their party's reelection. The assumption of vote-maximizing behavior by politicians has led to the search for empirical evidence of politically induced cycles in key variables such as unemployment, inflation, and real disposable income or in policies such as government purchases, transfer payments, taxes, and monetary growth (reviewed in sec. 2). The purpose of this paper is to develop a model, presented in section 3, from which a Federal Reserve reaction function is employed to test for the significance of an electoral cycle variable modeled to capture politically induced changes in monetary policy. The empirical results are presented in section 4 with concluding remarks in section 5.

Additional Information

Journal of Money, Credit and Banking, 18(1) February, 88-94.
Language: English
Date: 1986
United States, Presidential elections, Economic conditions, Federal reserve

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