Political business cycles in the parliamentary systems - Evidence from Turkey


Telatar F.

EMERGING MARKETS FINANCE AND TRADE, vol.39, no.4, pp.24-39, 2003 (Journal Indexed in SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 39 Issue: 4
  • Publication Date: 2003
  • Doi Number: 10.1080/1540496x.2003.11052546
  • Title of Journal : EMERGING MARKETS FINANCE AND TRADE
  • Page Numbers: pp.24-39
  • Keywords: credibility, inflation, political business cycles, MACROECONOMIC POLICY, MONETARY-POLICY, 2-PARTY SYSTEM, ELECTION DATES, DISCRETION, RULES, MODEL, JAPAN

Abstract

This paper empirically investigates the existence of political business cycles in Tarkey for the 1986-97 period. Turkey presents an interesting case, with high and chronic inflation problems continuing since the mid-1970s. Political surfing and manipulative hypotheses about the behavior of the governments in a parliamentary system are tested by using probit and logit estimation procedures that include the election timing as an endogenous variable. We found that the governments manipulated the economy to increase their chances to be reelected through money supply and government expenditures during the sample period, causing the stabilization programs to loose their credibility and thus the inflation problem to continue.