The Information Content of Elections and Varieties of the Partisan Political Business Cycle

Document Type

Article

Department

Economics (CMC)

Publication Date

2012

Abstract

This event study uses economic forecasts and opinion polls to measure the response of expectations to election surprise. Use of forecast data complements older work on partisan cycles by allowing a tighter link between election and response thereby mitigating concerns of endogeneity and omitted variables. I find that forecasters respond swiftly and significantly to election surprise. I further argue that the response ought to vary across countries with different institutional foundations. In support, I find that there exist three distinct patterns in forecasters’ responses to partisan surprise corresponding to Hall and Soskice’s three varieties of capitalism.

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© 2012 Springer-Verlag

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