Rational partisan theory of political business cycles suggests differences in inflation under left-wing and right …

-uncertainty regimes using past fundamental shocks, but an exogenous uncertainty shock still exists. Model estimation un- covers evidence … of state-dependent uncertainty effects. Shock responses significantly vary, depending on the current uncertainty regime … and shock magnitude. In the high (low) SS-uncertainty regime, economic activities decrease (increase) regardless of shock …

. -- Sunspots ; technology shocks ; economic fluctuations ; Dunlop-Tarshis-puzzle …