This note shows in what circumstances output persistence may invert the pattern of the electoral cycle when inflation expectations are of the adaptive or rational type and the government preferences are quadratic over output and inflation.

Many countries, especially developing ones, follow procyclical fiscal policies, namely spending goes up (taxes go down) in booms and spending goes down (taxes go up) in recessions. We provide an explanation for this suboptimal fiscal policy based upon political distortions and incentives for...