More than thirty years ago, political scientist Edward Tufte and economist William Nordhaus of Yale University put forth a seminal new theory, known as the political business cycle. While a business cycle typically refers to the economy's regular booms and busts, their central insight was that politics also influences the business cycle. In line with Paul Samuelson's blunt quip to President Kennedy about the economy, they expected incumbent presidents to maximize the economy's growth performance in the prelude to new elections today, even at the cost of an economic bust tomorrow.

In mapping out his research design, Tufte employs the metaphor of a detective solving a murder mystery. After establishing a motive of inflating the economy before elections, he searches for clues (such as changes in economic policy and outcomes) that prove his suspicions that there is a political business cycle. Tufte's study of developed country politics finds electoral cycles in fiscal transfers, growth, and unemployment.