This article provides evidence that the seasonally adjusted unemployment rate
conforms to a four-year pohtical business cycle such as the one hypothesized by
Nordhaus (1976) but only when the incumbent party wins the presidential
election. The unemployment rate, however, is only reduced by a cumulative
effect of .3 to .6 percentage points m the two years preceding a presidential
victory.
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References
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Beck, N. (1982) "Does there exist a political business cycle? A Box-Tiao analysis." Public Choice38, 2: 205-209.
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Buchanan, J. and R. Wagner (1977) Democracy in Deficit: The Political Legacy of Lord Keynes. New York: Academic Press.
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McCallum, B. (1978) "The political business cycle: an empirical test ." Southern Econ. J. (January): 504-515.
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Nordhaus, W. (1975) "The political business cycle." Rev. of Econ. Studies42 (April): 169-190.
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Tufte, E. (1978) Political Control of the Economy. Princeton, NJ: Princeton Univ. Press.
