Monetary political business cycles: new democracy setting (in Russian)

This paper studies whether politicians manipulate monetary instruments to win elections in the new democracies. The question makes sense because the Central Bank in the new democracy conditions is usually weak. A sample of 8 new democracies is analyzed via individual country vector autoregressions and via simple autoregressions for each variable of interest. I test various opportunistic political cycle models, both with adaptive and rational expectations. My results reject the political business cycle model with adaptive expectations due to the lack in the data of any impact of the electoral monetary expansion on output. However, there is evidence of opportunistic behavior in combination with rational expectations in Hungary, Russia and Mexico. Politicians print money before the elections and decrease the monetary base afterwards, but due to rational expectations they do not influence real variables. In other countries the hypothesis of the presence of monetary political cycles is rejected. However, I find some implications of fiscal political cycles in almost all countries.