ABSTRACT
In the last four decades, the relationship between economic performance and politics has been examined by means of various theoretical and empirical approaches, suggesting the possibility of a political business cycle in many countries. This study presents a review of the main models of Business Cycle Theory and of the main findings reported in the international literature. In part, the empirical evidence suggests that the political variable, particularly the electoral variable, is an important determinant of cyclical movements in the economy, indicating that Business Cycle Theory is consistent with the observed performance of several modem democratic societies.
KEYWORDS:
Political budget cycles; elections; fiscal policy; public expenditure