Short and Long-Term Effects of Economic Conditions on Individual Voting Decisions

A review of the Political Business Cycle (PBC) literature provides grounds for cautious optimism: the literature is cumulative and it exhibits steady theoretical advancement. Early contributions focused primarily on the demand side of the system, i.e. do voters react to economic fluctuations in simple, direct, self-interested fashion (e.g. Kramer, 1971)? More recently, the supply side of the system has attracted attention: do governments stimulate their economies in the period prior to elections then dampen those economies after the electoral challenge is past (e.g. Nordhaus, 1975)? And in current research scholars have begun to integrate the two sides of the system as part of what ultimately may become a reasonable general equilibrium model of the PBC (e.g. Fair, 1975; Frey and Schneider, 1978a).