Skip to main content
×
Home
    • Aa
    • Aa
  • Get access
    Check if you have access via personal or institutional login
  • Cited by 54
  • Cited by
    This article has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Dubois, Eric 2016. Political business cycles 40 years after Nordhaus. Public Choice, Vol. 166, Issue. 1-2, p. 235.


    Grittersová, Jana Indridason, Indridi H. Gregory, Christina C. and Crespo, Ricardo 2016. Austerity and niche parties: The electoral consequences of fiscal reforms. Electoral Studies, Vol. 42, p. 276.


    Klomp, Jeroen and de Haan, Jakob 2016. Election cycles in natural resource rents: Empirical evidence. Journal of Development Economics, Vol. 121, p. 79.


    Bodea, Cristina and Higashijima, Masaaki 2015. Central Bank Independence and Fiscal Policy: Can the Central Bank Restrain Deficit Spending?. British Journal of Political Science, p. 1.


    Hall, Steven R. 2015. Emerging Trends in the Social and Behavioral Sciences.


    Joarder, Mohammad Abdul Munim Hossain, A. K. M. Nurul and Ahmed, Monir Uddin 2015. Does the central bank contribute to the political monetary cycles in Bangladesh?. Economic Change and Restructuring,


    Lierse, Hanna and Seelkopf, Laura 2015. Capital markets and tax policy making: A comparative analysis of European tax reforms since the crisis. Comparative European Politics,


    Tomashevskiy, Andrey 2015. Capital Preferences: International Capital and Government Partisanship. International Studies Quarterly, p. n/a.


    Galantucci, Robert A. 2014. Temporary Payoffs or Trade Policy Priorities? Congressional Support for Trade Adjustment Assistance. Foreign Policy Analysis, p. n/a.


    Lami, Endrit Kächelein, Holger and Imami, Drini 2014. A new view into political business cycles: Household behaviour in Albania. Acta Oeconomica, Vol. 64, Issue. Supplement 1, p. 201.


    Nyblade, Benjamin and O'Mahony, Angela 2014. Playing with Fire: Pre-Electoral Fiscal Manipulation and the Risk of a Speculative Attack. International Studies Quarterly, Vol. 58, Issue. 4, p. 828.


    Bodea, Cristina 2013. Independent central banks, regime type, and fiscal performance: the case of post-communist countries. Public Choice, Vol. 155, Issue. 1-2, p. 81.


    Camyar, Isa and Ulupinar, Bahar 2013. The partisan policy cycle and firm valuation. European Journal of Political Economy, Vol. 30, p. 92.


    Clark, William Roberts and Arel-Bundock, Vincent 2013. Independent but Not Indifferent: Partisan Bias in Monetary Policy at the Fed. Economics & Politics, Vol. 25, Issue. 1, p. 1.


    CLARK, WILLIAM R. GOLDER, SONA N. and POAST, PAUL 2013. Monetary Institutions and the Political Survival of Democratic Leaders. International Studies Quarterly, Vol. 57, Issue. 3, p. 556.


    Copelovitch, Mark S. and Pevehouse, Jon C.W. 2013. Ties that Bind? Preferential Trade Agreements and Exchange Rate Policy Choice. International Studies Quarterly, Vol. 57, Issue. 2, p. 385.


    Klomp, Jeroen and De Haan, Jakob 2013. Do political budget cycles really exist?. Applied Economics, Vol. 45, Issue. 3, p. 329.


    Klomp, Jeroen and de Haan, Jakob 2013. Political budget cycles and election outcomes. Public Choice, Vol. 157, Issue. 1-2, p. 245.


    Klomp, Jeroen and de Haan, Jakob 2013. Popular protest and political budget cycles: A panel data analysis. Economics Letters, Vol. 120, Issue. 3, p. 516.


    O'Mahony, Angela 2013. Political Investment: Remittances and Elections. British Journal of Political Science, Vol. 43, Issue. 04, p. 799.


    ×

Mobile Capital, Domestic Institutions, and Electorally Induced Monetary and Fiscal Policy

  • William Roberts Clark (a1) and Mark Hallerberg (a2)
  • DOI: http://dx.doi.org/10.2307/2586015
  • Published online: 01 August 2014
Abstract

The literature on global integration and national policy autonomy often ignores a central result from open economy macroeconomics: Capital mobility constrains monetary policy when the exchange rate is fixed and fiscal policy when the exchange rate is flexible. Similarly, examinations of the electoral determinants of monetary and fiscal policy typically ignore international pressures altogether. We develop a formal model to analyze the interaction between fiscal and monetary policymakers under various exchange rate regimes and the degrees of central bank independence. We test the model using data from OECD countries. We find evidence that preelectoral monetary expansions occur only when the exchange rate is flexible and central bank independence is low; preelectoral fiscal expansions occur when the exchange rate is fixed. We then explore the implications of our model for arguments that emphasize the partisan sources of macroeconomic policy and for the conduct of fiscal policy after economic and monetary union in Europe.

Copyright
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

Alberto Alesina , and Lawrence H. Summers . 1993. “Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence.” Journal of Money, Credit, and Banking 25 (05) 151–62.

Fahim Al Marhubi , and Thomas D. Willett . 1995. “The Antiinflationary Influence of Corporatist Structures and Central Bank Independence: The Importance of the Hump-Shaped Hypothesis.” Public Choice 84 (07): 153–62.

R. Michael Alvarez , Geoffrey Garrett , and Peter Lange . 1991. “Government Partisanship, Labor Organization, and Macroeconomic Performance.” American Political Science Review 85 (06): 539–56.

David M. Andrews 1994. “Capital Mobility and State Autonomy: Toward a Structural Theory of International Monetary Relations.” International Studies Quarterly 38 (06): 193218.

Nathaniel Beck . 1987. “Elections and the Fed: Is There a Political Monetary Cycle?American Journal of Political Science 31 (02): 194216.

Helge Berger . 1997a. “The Bundesbank's Path to Independence: Evidence from the 1950s.” Public Choice 93 (12): 427–53.

Helge Berger . 1997b. Konjunkturpolitik im Wirtschaftswunder, Hand lungsspielräume und Verhaltensmuster von Bundesbank und Regierung in den 1950er Jahren (Stabilization Policy during the Wirtschaftswunde: Scope of Action and Behavioral Patterns of the Bundesbank and the Government). Tübingen: J. C. B. Mohr (Paul Siebeck).

Stephen A. Borrelli , and Terry J. Royed . 1995. “Government ‘Strength’ and Budget Deficits in Advanced Democracies.” European Journal of Political Research 28 (09): 225–60.

Richard C. K. Burdekin . and Leroy O. Laney . 1988. “Fiscal Policymaking and the Central Bank Institutional Constraint.” Kyklos 41 (4): 647–62.

Phillip Cerny . 1994. “The Dynamics of Financial Globalization: Technology, Market Structure, and Policy Response.” Policy Sciences 27 (4): 319–33.

William Roberts Clark , and Usha Nair Reichert . 1998. “International and Domestic Constraints on Political Business Cycle Behavior.” International Organization 52 (Winter): 87120.

Giancarlo Corsetti , and Paolo Pesenti . 1997. “Welfare and Macroeconomic Interdependence.” National Bureau of Economic Research Working Paper No. 6307.

Alex Cukierman , Pantelis Kalaitzidakis , Lawrence H. Summers , and Steven B. Webb . 1993. “Central Bank Independence, Growth, Investment, and Real Rate.” Carnegie-Rochester Conference Series on Public Policy 39 (Autumn): 95140.

Alex Cukierman , Steven B. Webb , and Bilin Neyapti . 1992. “Measuring the Independence of Central Banks and Its Effect on Policy Outcomes.” World Bank Economic Review 6 (09): 353–98.

Jakob De Haan , and Jan-Egbert Sturm . 1994b. “Political and Institutional Determinants of Fiscal Policy in the European Community.” Public Choice 80 (07): 157–72.

Jakob De Haan , and Jan-Egbert Sturm . 1997. “Political and Economic Determinants of OECD Budget Deficits and Government Expenditures: A Reinvestigation.” European Journal of Political Economy 13 (12): 739–50.

Michael Dooley . 1996. “A Survey of Literature on Controls over International Capital Transactions.” IMF Staff Papers 43 (09): 639–87.

Rudiger Dornbusch . 1976. “Expectations and Exchange Rate Dynamics.” Journal of Political Economy 84 (12): 1161–76.

Per-Anders Edin , and Henry Ohlsson . 1991. “Political Determinants of Budget Deficits: Coalition Effects Versus Minority Effects.” European Economic Review 35 (12): 1597–603.

Barry Eichengreen , and Jürgen von Hagen . 1996b. “Fiscal Restrictions and Monetary Union: Rationales, Repercussions, Reforms.” Empirica: Journal of Applied Economics and Economic Policy 23 (1): 323.

J. Marcus Fleming . 1962. “Domestic Financial Policies under Fixed and Floating Exchange Rates.” IMF Staff Papers 9: 369–80.

Jeffry A. Frieden 1991. “Invested Interests: The Politics of National Economic Policies in a World of Global Finance.” International Organization 45 (Autumn): 425–51.

Robert J. Friedrich 1982. “In Defense of Multiplicative Terms in Multiple Regression Equations.” American Journal of Political Science 26 (11): 797833.

Geoffrey Garrett . 1995. “Capital Mobility, Trade, and the Domestic Politics of Economic Policy.” International Organization 49 (Autumn): 657–87.

Geoffrey Garrett . 1998. Partisan Politics in the Global Economy. Cambridge: Cambridge University Press.

Geoffrey Garrett , and Peter Lange . 1995. “Internationalization, Institutions, and Political Change.” International Organization 49 (Autumn): 627–55.

Fabio Ghironi , and Fancesco Giavazzi . 1998. “Currency Areas, International Monetary Regimes, and the Employment-Inflation Tradeoff.” Journal of International Economics 45 (08): 259–96.

Kevin B. Grier 1989. “On the Existence of a Political Monetary Cycle.” American Journal of Political Science 33 (05): 376–89.

Mark Hallerberg , and Scott Basinger . 1998. “Internationalization and Changes in Tax Policy in OECD Countries: The Importance of Domestic Veto Players.” Comparative Political Studies 31 (06): 321–53.

Douglas A. Hibbs 1977. “Political Parties and Macroeconomic Policy.” American Political Science Review 71 (12): 1467–87.

Torben Iversen . 1998. “Wage Bargaining, Central Bank Independence and the Real Effects of Money.” International Organization 52 (Summer): 469504.

William R. Keech 1995. Economic Politics: The Costs of Democracy. New York: Cambridge University Press.

Thomas T. Mackie , and Richard Rose . 1982. The International Almanac of Electoral History. 2d ed. New York: Facts on File.

C. Duncan MacRae . 1977. “A Political Model of the Business Cycle.” Journal of Political Economy 85 (04): 239–63.

Thomas Mayer , ed. 1990. The Politics of American Monetary Policy. Cambridge: Cambridge University Press.

Jonathon W. Moses 1994. “Abdication from National Policy Autonomy: What's Left to Leave?” (response to Ton Notermans). Politics & Society 22 (06): 125–73.

Robert A. Mundell 1963. “Capital Mobility and Stabilization Policy under Fixed and Flexible Exchange Rates.” Canadian Journal of Economics and Political Science 29 (11): 475–85.

William D. Nordhaus 1975. “The Political Business Cycle.” Review of Economic Studies 42 (04): 169–90.

Ton Notermans . 1993. “The Abdication from National Policy Autonomy: Why the Macroeconomic Policy Regime Has Become So Unfavorable to Labor.” Politics & Society 21 (06): 133–67.

Thomas Oatley . 1999. “How Constraining Is Capital Mobility? The Partisan Hypothesis in an Open Economy.” American Journal of Political Science 43 (10): 1003–27.

G. Bingham Powell , and Garry D. Whitten . 1993. “A Cross-National Analysis of Economic Voting: Taking Account of the Political Context.” American Journal of Political Science 37 (05): 391414.

Kenneth Rogoff . 1985. “The Optimal Degree of Commitment to an Intermediate Monetary Target.” Quarterly Journal of Economics 100 (11): 1169–89.

Nouriel Roubini , and Jeffrey D. Sachs . 1989. “Political and Economic Determinants of Budget Deficits in the Industrial Democracies.” European Economic Review 33 (05): 903–33.

Susan Strange . 1996. The Retreat of the State. Cambridge: Cambridge University Press.

Lars E. O. Svensson 1995. “Optimal Inflation Targets, Conservative Central Banks, and Linear Inflation Contracts.” National Bureau of Economic Research Working Paper No. 5251.

George Tsebelis . 1995. “Decision Making in Political Systems: Veto Players in Presidentialism, Parliamentarism, Multicameralism and Multipartyism.” British Journal of Political Science 25 (My): 289325.

Michael Wallerstein , and Adam Przeworski . 1995. “Capital Taxation with Open Borders.” Review of International Political Economy 2 (3): 425–45.

Jaap Woldendorp , Hans Keman , and Ian Budge . 1998. “Party Government in 20 Democracies: An Update (1990–1995).” European Journal of Political Research 33 (01): 125–64.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

American Political Science Review
  • ISSN: 0003-0554
  • EISSN: 1537-5943
  • URL: /core/journals/american-political-science-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×