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Political Business Cycles in EU Accession Countries

  • This paper considers whether political business cycles existed in East European accession countries during the period 1990-9. Based on the Mundell-Fleming model expanded in Clark and Hallerberg (2000), we argue that the type of exchange rate regime and the relative independence of the central bank affects the instruments governments use to influence the economy before elections. In our empirical analysis, we find that accession countries with dependent central banks and flexible exchange rates have looser monetary policies in electoral periods than in non-electoral periods. If a country has a fixed exchange rate regime, it manipulates its economy in election years through running larger budgets instead of through looser monetary policy. The presence of such cycles in Eastern Europe has implications for the introduction of the euro in EU accession countries.

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Metadaten
Document Type:Article
Language:English
Author(s):Mark HallerbergORCiD, Lucio Vinhas de Souza, William Roberts Clark
Parent Title (English):European Union Politics
ISSN:1741-2757
Publication year:2002
Publishing Institution:Hertie School
First Page:231
Last Page:250
DOI:https://doi.org/10.1177/1465116502003002005
Release Date:2018/10/01
Volume:3
Issue:2
Licence of document (German):Metadaten / metadata
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