Political Parties and the Business Cycle in the United States, 1948-1984 / Alberto Alesina, Jeffrey Sachs.

Format:

Book

Author/Creator:

Alesina, Alberto.

Contributor:

National Bureau of Economic Research.

Sachs, Jeffrey.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1940.

NBER working paper series no. w1940

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1986.

Summary:

This paper tests the existence and the extent of a politically induced business cycle in the U.S. in the post-World War II period. The cycle described in this paper is different from the traditional "political business cycle" of Nordhaus. It is based on a systematic difference between the monetary policies of the two parties in a model with labor contracts. From an explicit optimization problem we derive a system of equations for output and money growth. Then we successfully test the non-linear restriction imposed by the theory on the parameters of the system of equations. We cannot reject the hypothesis that money growth has been systematically different under the two types of administration and that this difference contributes to explain output fluctuations.

Notes:

Print version record

June 1986.