Political Cycles and Cyclical Policies.

The authors test how government revenue and expenditure depend on ideology, elections, and economic activity. They show how fiscal forecasts can be used to identify the determinants of government revenue and expenditure. The approach is illustrated using a unique, unpublished Swedish data set of fiscal forecasts and forecasts of economic activity. The authors find partisan effects but no election effects. Revenue and expenditure, but also the fiscal surplus, are lower with right-wing governments. Fiscal policy has been countercyclical. Revenue varies positively with nominal earnings; expenditure varies negatively with real GDP. Copyright 1996 by The editors of the Scandinavian Journal of Economics.