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Elections and slower growth or recessions

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There seems to be some evidence supporting the idea of a political business cycle. That is, the economy tends to experience particularly fast growth just prior to elections and slower growth or recessions some time after elections.

A. Explain why and how this happens. That is, what is the underlying motivation of those responsible for this effect and what actions (fiscal and/or monetary) do they take to achieve it?

B. Use the AD/AS model and the Phillips curve model to explain what effect the actions taken in Part A will have on inflation if the economy starts from full employment.

Reference no: EM131438107

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