An analysis of economic behaviour of policy makers over the electoral business cycle in Malta

Despite the fact that theoretical research on opportunistic political cycles is very intuitive and well developed, empirical literature has found relatively weak evidence of political business cycles. This dissertation tries to reformulate the existing theory on two levels. On the empirical level, this paper tries to test the existence of very short cycles by using monthly data and examining the dynamics of 3-month moving average. Existing theoretical models of the political business cycle misspecified the interests of the primary actors - the incumbent politicians. Unlike previous theories, this dissertation argues that governments' incentives vary from election to election depending on their opinion poll standing. The main hypothesis that emerges is that the degree to which the government manipulates the economy should be thus negatively correlated with its political security going into the election. This prediction is tested by examining the role of several economic policy instruments in Malta during the elections in the period from 1996 to 2003. The main results show the existence of relatively short opportunistic cycles when the incumbent government is performing badly in the polls. Therefore the main hypothesis is confirmed.

Grantor dc:publisher.institution

University of Malta

Year dc:date.issued

2005

• Political business cycles -- Malta
• Public opinion polls -- Malta
• Economics -- Psychological aspects
• Business and politics -- Malta
• Political science -- Malta

Statement dc:rights

• info:eu-repo/semantics/restrictedAccess

Language dc:language.iso

en

Repository record dc:identifier.uri

https://www.um.edu.mt/library/oar/handle/123456789/83705

OAI identifier oai:identifier

oai:www.um.edu.mt:123456789/83705