Book contents
- Frontmatter
- Contents
- List of Figures and Tables
- Preface to the Second Edition
- Preface to the First Edition
- Part One Introduction
- Part Two Models of Macroeconomic Politics in a Democracy
- 3 Models of Accountability and Opportunism: The Electoral Cycle
- 4 Models of Choice: Partisanship
- 5 Unintended Consequences, Moral Hazard, and Time-Consistency
- Part Three The Sources and Authority of Macroeconomic Goals
- Part Four Institutions and Processes
- Part Five Conclusion
- References
- Index
3 - Models of Accountability and Opportunism: The Electoral Cycle
Published online by Cambridge University Press: 05 June 2014
- Frontmatter
- Contents
- List of Figures and Tables
- Preface to the Second Edition
- Preface to the First Edition
- Part One Introduction
- Part Two Models of Macroeconomic Politics in a Democracy
- 3 Models of Accountability and Opportunism: The Electoral Cycle
- 4 Models of Choice: Partisanship
- 5 Unintended Consequences, Moral Hazard, and Time-Consistency
- Part Three The Sources and Authority of Macroeconomic Goals
- Part Four Institutions and Processes
- Part Five Conclusion
- References
- Index
Summary
This is the first of two chapters that review the two most prominent models or theories of politics in macroeconomic policy making: the electoral cycle theory and the partisan theory. Each of these theories captures special features of democratic politics and helps us understand democratic dynamics. In doing so, they abstract from the institutional details through which economic policy is made. Each leaves a great deal about macroeconomic politics unexamined and unexplained. The electoral cycle model focuses on periodic elections as the democratic institution of interest, and the partisan model focuses on dual alternatives in these elections. Both types of models connect these features of focal interest to macroeconomic outcomes: unemployment, income growth, and sometimes inflation and income distribution.
In the real world, the impacts of elections and party differences are mediated through the complex institutional structure of fiscal and monetary policy making. For example, most of the contemporary models to be considered in these two chapters presume that governments influence macroeconomic performance through monetary policy, that is, through government control of the money supply and interest rates. Monetary policy is controlled by central banks, such as the U.S. Federal Reserve System (“the Fed”). Electoral cycle and partisanship models often assume that the Fed obediently follows the preferences of politically motivated public officials. In fact, the Fed is considered to be one of the most politically independent of the central banks in the industrialized nations. Therefore, the idea that it is merely a transmission mechanism for politically motivated policy is problematic. Similarly, fiscal policy, that is, taxing and spending policy, has been seen as a channel for political manipulation of the economy. In the United States, these policies are the products of complex interactions among the two houses of Congress and the president. No observer of the contemporary scene would claim that that there is reliable and predictable cooperation among these actors, whether or not they are controlled by the same party.
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- Economic Politics in the United StatesThe Costs and Risks of Democracy, pp. 57 - 73Publisher: Cambridge University PressPrint publication year: 2013